Condo Law Digest – December 2014

Toronto Standard Condominium Corporation No. 2130 v. York Bremner Developments Limited, 2014 ONCA 809
Decision Date: November 17, 2014
http://canlii.ca/t/gf9n2

This is a ruling on an appeal brought forward from the judgment of Justice Matheson. In that decision, Justice Matheson had ruled in favour of the TSCC that an arbitrator be appointed to decide a number of disputes between the parties. Since at least one of the issues was clearly within the arbitrator’s jurisdiction, an arbitrator should be appointed and determine his jurisdiction over the remaining issues. York Bremner Developments have appealed, arguing that Justice Matheson should not have referred all of the disputes to arbitration. Rather, she should have assessed each issue and referred only those that were at least partially arbitrable. The Appeal Court judges disagreed with York Bremner and rejected the appeal. They reasoned that the TSCC’s grounds for appointing an arbitral tribunal included Section 10(1) of the Arbitration Act, according to which there is no appeal from the court’s appointment of the arbitral tribunal.

Comment: The TSCC was awarded costs of $20,000. York Bremner Developments have exercised their right to appeal the arbitrator’s ruling on jurisdiction to the Superior Court.

Street protest march (Ontario condo law blog post)

Rail, tram and public service unions protest march against Public Service Reduction Act by Federal Arbitration Court. Sam Hood via Wikimedia Commons.

Condo Law Digest – November 2014

Banane-A-05 cropped.jpg
Banane-A-05 cropped” by Priwo – photo taken by de:Benutzer:Priwo. Licensed under Public domain via Wikimedia Commons.

Toronto Standard Condominium Corporation No. 2095 v. West Harbour City (I) Residences Corp., 2014 ONCA 724
Decision Date:  October 22, 2014
http://canlii.ca/t/gf1qs

This is an appeal from the judgment of Justice Corbett dated September 23, 2013. West Harbour City is a developer, and TSCC 2095 is one of its developments. The condo’s board entered into an agreement with the developer which restricted the rights of owners to sue the builder for deficiencies that were beyond the amounts of the Tarion warranty.  Now, the original board was controlled by the developer’s nominees. When control of the board was turned over to unit owners, they sued to set aside this agreement, arguing that no reasonable board of directors would have agreed to it. Justice Corbett declined to rescind the agreement, saying that a developer was entitled to limit its risk, and that the agreement had been disclosed to perspective buyers and also registered on title. In this judgment, the appeal court unanimously dismissed the appeal. They also stated that whether developers should be allowed to limit their liability in this way is a matter of policy for the legislature to decide, rather than for judicial determination.

Comment: One more reason to get legal advice when buying a condo.  Provisions limiting developers’ liability can have financial impact, should a building turn out to have deficiencies.

Condo Law Digest – October 2014

Owl Family Portrait by travelwayoflife (Flickr: Owl Family Portrait) [CC-BY-SA-2.0 (https://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons


Van Sickle v. Conlon, 2014 ONSC 5437
Decision Date: September 18, 2014
http://canlii.ca/t/g914j

In 2011 the plaintiff and the defendant were Directors on the Board of a Housing Co-op. After a meeting to discuss a possible eviction, Ms Van Sickle took with her a copy of the confidential report discussing the matter. Mr. Conlon sent an email message to the Board members with the subject line, “Verna’s theft of the document from the meeting on Thursday night.” Ms. Van Sickle sued Mr. Conlon for defamation; she won and was awarded $7500. In this appeal, Mr. Conlon challenges the Deputy Judge’s treatment of his defense in the original trial. Mr. Conlon’s defenses were 1) that it was in fact true that Ms Van Sickle had stolen documents; and 2) qualified privilege (that is, he had the right to criticize her to protect the dignity of the Co-op). Deputy Judge Richardson rejected both defenses. Mr. Conlon had a “total and reckless disregard for the truth” and his conduct was found to be “malicious” (hence the defense of qualified privilege was rejected.) Justice Perell, the appeal judge, found no reviewable error and dismissed the appeal. Costs were fixed at $12, 000.

Comment: Although this case involved the Directors of a Housing Co-op (rather than a condominium), all Board Members should take note.

See also: Preventing Conflict on a Condo Board, Strategies for Getting Your Board Un-stuck, and Think Before You Type (about the dangers of e-mail communication).

Condo Law Digest – September 2014

Trees in a Field by Martin Cathrae

Boily v. Carleton Condominium Corporation 145, 2014 ONCA 574
Decision Date: August 6, 2014
http://canlii.ca/t/g8gcz

I first wrote about this case in the post “Bad Faith and What it Means for Condo Board Members.” In a ruling in March 2013, Justice Beaudoin found that the Board had acted in bad faith in managing some post-repair landscaping. He ordered that Board members be held personally responsible both for the cost of enforcing the order they had violated, and for the cost of restoring the property to its previous state. In this action, the Board members appeal the finding of contempt of court and the penalties ordered by Justice Beaudoin (particularly the order that they pay the cost of restoration.) Here the judges of the appeal court uphold the finding of contempt, but set aside the sanction that the Board members pay the cost of restoration. Instead Board members were each ordered to pay a fine of $7500 to the Corporation. While any contempt of court is serious, the judges took into consideration that the Board members were not motivated by personal gain or vengeance, but by the conviction that “they knew best.” However their failure to seek legal advice was seen as an aggravating factor. The appeal court reasoned that Justice Beaudoin had made an error in principle by basing the penalty on the cost of restoration, rather than on the desirability of deterring violations of court orders. One justice dissented and would have set aside the finding of contempt.

Comment: Justice Epstein, writing for the majority, said that this case was “particularly unfortunate” because if the Board members had sought legal advice, the parties would have saved time, money and avoided needless acrimony.

York Region Standard Condominium Corp. No. 1113 v. Antonelli, 2014 ONSC 4844
Decision Date: August 14, 2014
http://canlii.ca/t/g8r77

In May 2014 the Corporation obtained a judgment against Mr. Antonelli to immediately and permanently remove two dogs from his unit. Mr. Antonelli was not present when the motion was heard. In this action, the Corporation seeks an order of contempt against him, and an order permitting them to engage a contractor to remove the animals.  Mr. Antonelli brings a motion to set aside the original decision and to return to the court in February 2015.  Justice Emery declined to grant Mr. Antonelli’s request and found for the Corporation.  The dogs must be removed, and he must pay the costs of the motion (fixed at $10 000).

Comment:  I don’t know the sequence of events that brought the parties to this point.  Often the preliminary step in such a dispute is a letter to an owner from the condo board.  As I have written before, owners should never ignore such letters and are advised to consult a condominium lawyer.  Better pay for good advice now, than pay much more later in the absence of such advice.

Condo Law Digest – August 2014

Dewy spider web.jpg

Simcoe Condominium Corp. No. 12 v. Walker, 2014 ONSC 4109
Decision Date: July 7, 2014
http://canlii.ca/t/g80bl

This is an endorsement on costs; the parties and their lawyers resolved all other matters.  Ms. Walker, owner of a unit in the condominium corporation, persistently refused to abide by the Rules, Bylaws and Declaration of the corporation, including refusing to control her dog, making unauthorized renovations, and renting out parts of her unit without permission.  The judge called this case a “sorry saga of one person’s refusal to live peaceably and cooperatively.”   The applicants asked for costs of just over $59 000 on the basis of full indemnity.  The judge fixed costs on the full indemnity scale at about $48 700.  Unpaid costs will be added to the common expense charges for Ms. Walker’s unit.

Comment:  Condo owners tempted to flout the rules, take note.

 

Gordon v. York Region Condominium Corporation No. 818, 2014 ONCA 549
Decision Date: July 15, 2014
http://canlii.ca/t/g83w9

This is an appeal of Justice McCarthy’s decision that the Condominium’s by-law permitting the Board to remove a Director who violated the Director’s Code of Ethics was not invalid.  (A summary of that decision can be found in the December 2013 Condo Law Digest.) Gordon argues that the by-law is not reasonable because such a determination should be made by an independent third party, rather than fellow Board members; that such by-laws are inconsistent with the Condominium Act as a whole; and that the judge erred in not re-instating him.  The panel dismissed the appeal and noted that Mr. Gordon is at liberty to stand for re-election to the Board.

Comment: Have we seen the end of this case?

Robinson v. York Condominium Corporation No. 365, 2015 HRTO 1059
Decision Date:  July 18, 2014
http://canlii.ca/t/g84p9

Ms. Robinson suffers from electro-magnetic frequency sensitivity (“EMS”), a complex and disabling condition.  She charges that this condition has been made worse by the adoption of a new security system at her condominium complex, and that the Corporation and the Property Management Company have not accommodated.   The adjudicator found that EMS is indeed a disability within the meaning of the Ontario Human Rights Code.  However he did not find that the evidence provided supported the claim that the new security system was at the root of the applicant’s worsened condition.  The application was dismissed.

Dewy spider web“. Licensed under CC BY-SA 3.0 via Wikimedia Commons.

Condo Law Digest – July 2014

Hymettus after the Storm By Ioannis Stampoulis

York Condominium Corporation No. 301 v. James, 2014 ONSC 2638
Decision Date: May 5, 2014
http://canlii.ca/t/g6tps

Carleton Condominium Corporation No. 348 v. Chevalier, 2014 ONSC 3859
Decision Date: June 25, 2014
http://canlii.ca/t/g7mrr

These are two recent cases in which a judge has ordered the sale of a unit and the eviction of its mentally ill owner. In both cases, the owners failed to comply with several previous orders and their actions presented numerous health and safety issues for other residents, staff, contractors and visitors. In both cases, the Office of the Public Guardian and Trustee was called in to safeguard the interests of the respondents. And in both cases, the condominium corporations incurred extra costs for enhanced security because of the respondents.

Comment: These are sad and difficult cases for everyone involved.

A warning about investment fraud and identity theft:

This past month also brought the dismissal of the appeal in the convictions of Andrei Khatchatourov and Natalya Reznik (R. v. Khatchatourov, 2014 ONCA 464, http://canlii.ca/t/g7g1h). Khatchatourov and Reznik (a paralegal) were found guilty of multiple mortgage financing frauds. Their strategy was to gain the trust of recent immigrants from Russia and Ukraine, involve them in condominium “investment” schemes, then use their identities to obtain mortgage financing, take title to properties and obtain mortgage advances from banks. The individuals who were targeted lost money and in one case, lost their home and were driven to bankruptcy. The financial institutions involved lost over one million dollars, ultimately reimbursed by the Canadian Mortgage and Housing Corporation.

So a friendly word of caution: If an investment opportunity sounds too good to be true, it probably is. Seek independent legal advice before signing contracts, and never sign something you haven’t read or don’t understand. A consultation with a lawyer might seem expensive, but failing to get good advice might cost you much more in the end.

Condo Law Digest – June 2014

Advertisement for cigars from Havana. Lithograph, 1868

Advertisement for cigars from Havana. Lithograph, 1868

MacKay & Cheney v. Metropolitan Toronto Condominium Corp., 2014 ONSC 2863
Decision Date:  May 12, 2014
http://canlii.ca/t/g6v95

In late June 2013 the applicants noticed a strong smell of cigar smoke in their unit. They reported this to the concierge on duty and made a formal complaint to the building’s manager.  About 2 weeks later, as the smell of smoke continued, they contacted their insurance company.  An adjustor investigated and concluded that the contents were smoke-damaged and that the unit was uninhabitable.  The applicants moved to a hotel at the insurance company’s expense.  The owner of the upstairs unit was asked to refrain from smoking cigars in his unit pending an investigation.  (Will it surprise anyone reading this to hear that he did not?) Then followed several months of delays due to vacations (the manager, then the President of the Board), visits by consultants and engineers (one of whom identified the smoke migration between the units as a fire safety risk and violation of the Ontario Fire Code), letters from the Board’s lawyer to the applicants, letters from the applicants’ lawyer to the Board, “dueling correspondence” between the lawyers, differences of opinion among various engineering consultants as to whether the problem of smoke transfer had been definitively solved, and further delays due to inaction.

After five months of living in a hotel and not having their concerns addressed, McKay and Cheney commenced an application, seeking a declaration that the corporation had breached its duty to maintain the common elements and to repair the common elements after damage, and that the members of the Board (named as individual defendants) had breached their duty to act in good faith and exercise reasonable care, diligence and skill.  The present two-day trial, held on an urgent basis, dealt only with the question of repair and maintenance of the common elements.  Justice Mew found that there was evidence that the problem was now solved, although he advised that it may be prudent for the corporation to take additional steps.  In particular, there is an arguable case for further testing between the two units.  He ordered partial costs in favor of the applicants.

Comment: The question of the directors’ personal liability has not yet been addressed.  Justice Mew noted that a “negative attitude” on the part of the Board towards the applicants coloured their decision making.  The applicants were “quickly branded as complainers who had far too quickly ran off to their own lawyers.”  Managers and Boards must remember that judges and arbitrators may not necessarily endorse their views, and that even seemingly “difficult” owners have rights.

Condo Law Digest – May 2014

Photo by Eric Dufresne of Trois Rivières, Canada

Patriarcki v. Carleton Condominium Corporation No. 621, 2014 ONSC 1507
Decision Date: April 15, 2014
http://canlii.ca/t/g6kvx

Ms. Patriarcki brought a claim against the condominium corporation and two contractors (Shields Mechanical and Ideal Combustion) because of ongoing problems with the boiler in her unit from about May to October 2006. The boilers in each unit of the corporation were replaced in November 2006. Shortly after Ms. Patriarcki complained of fumes from the new boiler on start up and requested an inspection by the Technical Standards and Safety Authority (TSSA). The inspector found that fumes were a product of off-gassing of the glues used to install the boiler, that no carbon monoxide was present, and that a complete air quality analysis would be Ms. Patriarcki’s responsibility (not the contractor’s). The corporation made things worse (alleges Ms. Patriarcki) by installing new synthetic carpeting in her unit. (New commercial carpets can produce off-gassing for one to two years.) Ms. Patriarcki claimed that her health suffered as a result of these different irritants, with problems including unmanageable asthma, multiple chemical sensitivities and chronic fatigue syndrome. She supplied medical reports dated 2012 in support of these claims.

In this action, the judge agreed to the defendants’ request for summary judgment dismissal. The medical reports supplied by Ms. Patriarcki did not give evidence of a causal connection between the boilers and her health problems, and she did not provide any evidence linking the boilers with the poor air quality in her unit.

Comment: In asking for submissions on costs, the judge noted that he was sympathetic to the various health difficulties suffered by the plaintiff.

Kim v. Trump, 2014 ONSC 2129
Decision Date: April 22, 2014
http://canlii.ca/t/g6mgf

Between 2007 and 2011 the plaintiffs entered into agreements to purchase units in the Trump Hotel. They took occupancy of these units in February 2012 and entered into the Reservation Program Agreement. According to this agreement, the Trump Hotel Management Corp. would rent out the units and each owner would receive revenue from the rental of their unit, with fees, expenses and charges deducted. The plaintiffs charge that the rental and occupancy rates were lower than they had anticipated and the deductions were higher. They asked to see the financial statements for the entire Reservation Program (rather than just their own units), and these requests were denied. In November 2012 the plaintiffs refused to close the purchase agreements and instead issued a statement of claim. They seek to have the agreements rescinded and their deposits returned, and claim damages for loss of opportunity, misrepresentation and conspiracy.

In this action the plaintiffs name eight defendants and seek an order appointing an inspector to investigate the Reservation Program; in the alternative they seek an order compelling production of financial documents. This motion was dismissed. The Toronto Standard Condominium Corporation No. 2267, named as one of the defendants, sought an order dismissing the plaintiffs’ action on the grounds that they were incorporated only in October 2012 and so the plaintiffs have no cause of action against them. Judge Carole Brown agreed. She granted the defendant’s motion on the grounds that TSCC No. 2267 did not exist when the plaintiffs entered into the purchase agreement.

Comment: The judge provided a number of detailed arguments for dismissing the plaintiffs’ motion.

Another case involving the Trump Tower can be found in last month’s Condo Law Digest (scroll down to the third case.)

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Condo Law Digest – April 2014

by Marlith (Shared under Creative Commons License)

1716243 Ontario Inc. v. Muskoka Standard Condo Corp. No. 54, (with a counterclaim) 2014 ONSC 1848
Decision Date: March 24, 2014
http://canlii.ca/t/g68rp

Judge Gilmore referred to this claim and counterclaim as an “extended and somewhat complex litigation” over an inadvertent error.  The applicant purchased a unit in the condo corporation in February 2012.  The unit included two parking spaces.  The Status Certificate contained an error, in that the calculation of the unit’s common expenses did not include the amount associated with the two parking spaces (about $168/month).  The applicant stopped paying the charge for the parking spaces in May 2012 and argued that the corporation is precluded from pursuing payment related to the parking spaces.  The corporation argued that the status certificate should not be read in isolation and that it bound the corporation only for the fiscal year ending March 2012.  In January 2013 the corporation registered a lien for non-payment of common expenses (amounting to about $6945.00).

In this action, the unit owner seeks a declaration that it is not required to pay common expenses for the parking spots and an order discharging the lien.  The corporation seeks an order requiring the owner to pay the full amount of the lien, interest of 24%, all costs incurred by the corporation and the full costs of both actions, and a declaration that the owner is in breach of the Condominium Act and of the corporation’s by-laws, rules, etc.

The judge ruled that the owner could not avoid payment for the parking places after March 2012 (about $2185 owing with nominal costs award of $750).  He declined to order the owner to pay the corporation’s full costs, since the origin of the matter was an error by the corporation.

Comment:  The corporation spent about $30, 000 to bring this matter to court.  I cannot help but wonder if the parties attempted mediation.

Elbaum v. York Condominium Corporation No. 67, Nathalia Gauto and Miqueias de Oliveira Silva 2014 ONSC 1182
Decision Date: Feb 26, 2014
http://canlii.ca/t/g4n3d

The plaintiff, an elderly woman, owns a unit in the condominium corporation.  In September 2012, during a walk on the common elements of the condominium, she was seriously injured when she was attacked by a dog owned by Gauto and de Oliveira Silva.  (The dog was unleashed at the time.)  She has sued the dog owners under the Dog Owners’ Liability Act and the condominium corporation for common law negligence under the Occupiers’ Liability Act.  The corporation has brought forth a motion seeking to have the plaintiff’s claim dismissed under Rule 21.  To be successful, the corporation would have to show that it was “plain, obvious and beyond all doubt” that the plaintiff could not succeed.

Judge Perell dismissed the motion.  He found that even if the corporation was not the owner or harbourer of the dog (and therefore there was no strict liability under the Dog Owners’ Liability Act), this would not preclude a claim of common law negligence or a claim under the Occupiers’ Liability Act.

Comment:  It is no surprise that there are so many rules and by-laws regarding dogs in condominiums.

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The Tenants, their Dog and the Small Claims Court Decision.

Photo “Behind the Red Wall” by skycaptaintwo

Every month I provide a brief summary of some recent Ontario condominium cases. This small claims court decision from April 2013 (Carriero v Carli, 2013 CanLII 88835) caught my eye as deserving some extended discussion.

The defendants began renting a unit belonging to the plaintiff in March 2010. About a month later the property manager of the condominium sent a letter to the plaintiff, alleging that his tenants were keeping a dog in the unit, drawing his attention to the rule forbidding pets and asking that the dog be removed. The plaintiff got in touch with his tenants who refused to remove the dog. Their position was that the condominium management was “only trying to scare” him.

Comment: Regular readers will know that I believe you should never ignore a letter from the condo board. While the plaintiff did not ignore the letter, there is no indication that he responded in writing, spoke to the condominium management or sought legal advice.

About a week later the defendants’ lawyer wrote to the property management company, stating the view that the “no pets” rule was unenforceable.  The lawyers for the condominium corporation wrote back, stating that the rule was indeed valid, and that they would begin court proceedings against the plaintiff and his tenants if the dog was not removed by May 7, 2010.  The defendants took the view that they would not be “bullied” by the property manager who was enforcing the “no pets” rule on a selective basis.

Comment:  The plaintiff did not seek legal advice at this time, and would only do so months later, in October.  Was he relying on the opinion of his tenants’ lawyer?  If so, this was ill-advised.  Had he consulted a lawyer on his own behalf, the plaintiff might have had a better idea of the possible consequences of inaction.  (See my website for information on the importance of lawyers in mediation.)

Will it surprise anyone reading that the defendants did not remove their dog?  Over the next four months the condominium’s lawyers billed the corporation nearly $13 000 in fees regarding this matter.  The corporation, invoking their legal right to recover costs associated with enforcing the condominium’s rules, registered a lien for this amount against the plaintiff’s unit.

Comment: The provision in the Condominium Act that boards can “charge back” the costs of enforcement to owners who have broken the rules is meant to protect “innocent” owners from the high costs of litigation.  Owners who fail to abide by rules should be aware that legal costs can balloon out of control amazingly quickly. Two recent examples are York Condominium Corporation 345 vs. Qi and Ottawa-Carleton Standard Condominium Corporation No. 671 v. Friend.

In November 2010, as the result of a Superior Court application at Brampton, the dog was ordered removed and the defendants were ordered to pay $2000 in costs.

The plaintiff estimates that he has spent $23 000 in the matter (including around $13 000 legal fees incurred by the condominium.) In this application to the small claims court, he sought to recover these costs from the defendants, arguing that their “defiant” behavior and attitude caused his damages.  In considering his application Deputy Judge Klein noted that: (1) The Condominium Act states that an owner must take “all reasonable steps” to make sure that his tenants, or anyone else in his units, complies with the condominium’s declaration, by-laws and rules. (2) Although the plaintiff is a “victim” here, he should have attempted to mitigate his situation by  ousting the defendants from his unit and/or challenging the amount of fees charged by the condominium’s lawyers.  (3) The fees charged in this case were “excessive and simply out of line.”

The judge also noted that, despite the provision in the Condominium Act that disagreements between the corporation and owners be resolved through mediation or arbitration, there was no evidence that either was attempted.

Comment: Some lawyers take the view that, when the issue is a straightforward violation of rules, there is no obligation to mediate.  Is this a conflict that should have been mediated? (See for example, The Judge’s Dog, The Elusive Parrot or The Sisters Upstairs and the New Hardwood Floors.) I do not have enough information to know whether mediation might have resulted in a better outcome in this case.  My own view is that, while mediation is not advisable in every condominium dispute, it is probably advisable more often than is realized.  See my post on why you might want to keep talking, even if it seems there is “nothing to discuss.”

The judge ruled that although the defendants were at fault (for refusing to remove their dog) the plaintiff must bear some responsibility.  In particular, he should have sought legal advice at an earlier date, attempted to remove the defendants from his unit and challenged the amount of fees charged by the condominium’s lawyers.  The judge awarded the plaintiff $13 000 in damages and $750 in costs.

Comment: You can read the full text of the judge’s decision here.