ACMO and CCI Ottawa Conference – May 31, 2013

James Davidson, Nancy Houle and Christy Allen of Nelligan O’Brien Payne LLP will be speaking at the Association of Condominium Managers of Ontario (ACMO) and Canadian Condominium Institute (CCI) Ottawa Conference on May 31, 2013. The conference is focused on timely and relevant issues that are of interest to condo property managers, boards and owners. Topics will include:

  • Electric Cars;
  • Directors Liability;
  • Second-Hand Smoke;
  • Generators;
  • Licensing the Condominium Manager and,
  • Possible Amendments to the Condominium Act

For more information on the conference and how to register, click here.

Status Certificates and Unit Problems

In paragraph 12 of the status certificates, a condominium corporation must disclose any circumstances, of which the corporation is aware, that may result in an increase in the common expenses for the unit. Could this include a unit problem?

In my view, the answer is: “In some cases, yes.”

There are many “common element issues” that might need to be disclosed in paragraph 12 of the status certificates. Here are some examples:

  • An unexpected common element defect;
  • A common element repair or replacement that is required, or may be required, earlier than predicted by the reserve fund plan;
  • A common element repair or replacement that is, or may be, more costly than predicted by the reserve fund plan;
  • Any common element repair or replacement that is not covered by the reserve fund plan or the operating budget;
  • A reserve fund plan that calls for special assessment(s) or increase(s) in contributions to the reserve fund (beyond inflation) at any time in future;
  • A proposed common element alteration or improvement (as soon as it is receiving serious consideration);
  • An unexpected disaster that is not fully covered by insurance;
  • Any annual operating expense that is, or may be, more costly than predicted in the corporation’s budget.

Once the corporation has actual knowledge of one or more of these risks or possibilities, the corporation then must ask itself the following question:

Could this result in a special assessment/increase in common expenses (beyond inflation)?

If the answer is “yes,” then this must be disclosed in paragraph 12 of the status certificates. [Note: An inflationary increase is not a real increase. Increasing the common expenses by inflation simply keeps the common expenses constant, in real terms.]

A “unit problem” can sometimes also result in an increase in common expenses. For instance:

  • a unit defect; or
  • damage caused to the property (by a unit owner or occupant); or
  • a violation of the Condominium Act, or the corporation’s Declaration, By-laws or Rules (by a unit owner or occupant)

might each result in an increase in common expenses (for the unit), because:

  • the corporation may be required to repair the unit defect (if the owner fails to do so), and add all related costs to the owner’s common expenses (pursuant to section 92 of the Condominium Act or perhaps provisions in the Declaration); or
  • the corporation may have the right to add all costs incurred to repair common elements (damaged by a unit owner or occupant) to the unit’s common expenses; or
  • the corporation may have the right to add enforcement costs (incurred due to a violation by an owner or occupant) to the unit’s common expenses.

So, if the corporation has knowledge of a unit problem, the corporation should ask itself the following question:

Could this possibly result in an increase in the common expenses for that unit?

If the answer is “yes,” the problem might then need to be disclosed in paragraph 12 of any status certificate issued for that unit.

Live-in Caregivers are Family

A recent Alberta decision from January, 2013, Condominium Plan No. 9910225 v. Davis (Alberta Court of Queens Bench), held that the ‘Single family’ provision in a condominium’s by-laws did not prohibit a caregiver from living in the unit with a resident. In this decision, the Court found that “the presence in a unit of a live-in caregiver, who is required to provide necessary assistance to infirm residents, does not mean the unit is ‘being used other than as a single family dwelling.

The condominium’s by-laws stated that the units could only be used as single-family dwellings, and that roomers and boarders were prohibited. The owner, who was 87 years old and blind, hired a live-in caregiver. The condominium corporation was of the view that a live-in caregiver was prohibited by the single family provision. The corporation sought to change the by-laws to specify that live-in caregivers were permitted, but 90% of the voting unit owners voted against the change at an annual general meeting. The corporation then started a court application to seek an order requiring the caregiver to vacate the unit.   

The Court held that condo by-laws are a private contract among unit owners, to which the Alberta Human Rights Act and the Canadian Charter of Rights and Freedoms do not apply. It also held that there were no prior cases on the issue of whether live-in caregivers, nannies, or maids were prohibited by single family provisions. The Court therefore made its decision based on its interpretation of the by-law itself, finding that the by-law did not prohibit live-in caregivers.

In coming to its decision, the Court examined a ‘purposive provision’ in the by-law. This provision stated that the purpose of the by-law included health, safety, comfort, and convenience of condo owners. The Court found that these purposes were incompatible with prohibiting live-in caregivers who are required to provide necessary care to residents.  Therefore, the Court felt that the term “family” should be interpreted to include live-in caregivers. The Court added that it would be open to the corporation to pass a new by-law, specifically prohibiting live-in caregivers, if it wished, stating; “that way, prospective purchasers might be made aware that, in the event that they suffer some catastrophe or infirmity, [the corporation] will require them to vacate, rather than have access to necessary live-in medical care.

What does this decision mean for Ontario condominium corporations? This decision is helpful for corporations that have single-family provisions, but wish to allow live-in caregivers. On the other hand, corporations that are seeking to exclude live-in caregivers, with or without an express provision to this effect, are still facing some uncertainty. My sense is that the Court only decided this matter with reference to the by-law to avoid addressing the more contentious human rights issue. The Court’s decision that the Alberta Human Rights Act did not apply to condo corporations was based on a narrow application of that Act. In Ontario, we know that the Human Rights Code and the Accessibility for Ontarians with Disabilities Act both apply to condo corporations and that it would be more difficult to avoid the human rights implications of such a prohibition. As such, I believe that prohibition of live-in caregivers might not even be possible in Ontario.

Court Considers: Forced Sale of Owner’s Unit or Forced Removal from the Board

In extreme cases; such as when dealing with a very unruly owner or Director; the courts are sometimes asked for an order requiring the owner to sell his or her unit, or, in the case of a Director, requiring the removal of the Director from the Board. The most recent case of this sort in Ontario is the case of YCC 137 v. Hayes.

Here's my summary of the case, published in the November 2012 edition of Condo Cases Across Canada, which I author, and is published quaterly by the National Chapter of the Canadian Condominium Institute (CCI).

York Condominium Corporation No. 137 v. Hayes (Ontario Superior Court) August 7, 2012

Court orders owner to refrain from assaulting, verbally abusing, swearing at, harassing, threatening or intimidating others.

The respondent owner, also a Board member, had engaged in violent and threatening behaviour. The details were summarized by the Court as follows:

"…the (owner) committed no less than five physical assaults on other condominium unit owners or occupiers and, in several other instances, engaged in verbal abuse, threats and intimidation in relation to a board member, other unit owners or occupiers and service providers to the condominium. The result of this behaviour is that the respondent has repeatedly intimated and instilled fear in a number of her fellow members of this community."

The Court held as follows:

"I am, therefore, satisfied that the (condominium corporation) has proved the various forms of misconduct, as summarized above, on a balance of probabilities. In all the circumstances, I am satisfied that the (condominium corporation) has proved that the (owner) has been repeatedly in violation of s. 117 of the Act and has also violated the declaration, by-laws and rules of the condominium."

The Court granted an order restraining the owner from continuing her improper conduct (which was specifically spelled out in the order). The Court declined to grant a "broad, permanent injunction" (requested by the condominium corporation) which would restrain the owner's conduct in virtually all aspects of her interaction with the condominium and the members of its community. The Court felt that this would be "both overreaching and unworkable," and instead granted a more specific order prohibiting the owner from repeating her improper conduct.

The Court also declined to order that the owner be removed from the Board. The Court said that such an order might be possible under section 134 of the Condominium Act, 1998 in another case (where the respondent's election was at issue), but was not appropriate on the facts of this case. The Court also said:

"In any event, even if I were to conclude that the jurisdiction of the court extended to the granting of an order removing a member of the board in the circumstances of this case, I would decline to exercise my discretion on the basis that there is a clear, well-established democratic process for the removal of a director prior to the expiration of his or her term set out in the legislation."

The Court declined to order that the owner sell her unit and vacate the condominium, stating:

"…the remedy of forced sale is, in many ways, the ultimate and harshest remedy available. As such, it should be reserved for the most egregious cases.

In my view, before the harshest remedy is imposed, the (owner) ought to be given the opportunity to show that she is capable of complying with the rules and regulations governing behaviour in this community. I have made a restraining order imposing limitations on her behaviour. It is to be hoped that this order will have a salutary effect and that the (owner) is able to demonstrate her willingness to change and conduct herself in accordance with the rules which she agreed to when she purchased her unit."

Kingston Area Condominium Association (KACA) Seminar – April 27, 2013

James Davidson and Nancy Houle of Nelligan O'Brien Payne LLP are two of the speakers at the upcoming Directors Seminar to be hosted by the Kingston Area Condominium Association (KACA), which will take place in Kingston on April 27, 2013. Topics will include:

  • Common Element Changes (sections 97 and 98 of the Condomium Act, 1998)
  • Update on Coming Changes to the Act
  • Recent Workplace Safety and Insurance Board (WSIB) Changes
  • Benefits of Engineering Specs/Drawings
  • Recent Court Decisions

For more information on this event, please click here.

If you would like to register for the seminar (registration cost $25.00), contact Wanda Blakney at (613) 531-7905 or wanda.blakney@nelligan.ca.

Canadian Condominium Institute (CCI) Directors’ Course – April 20, 2013

John Peart, James Davidson, Nancy Houle and Christy Allen of Nelligan O'Brien Payne LLP will be speaking at the Canadian Condominium Institute (CCI) Ottawa Chapter Spring 2013 Directors' Course on April 20 and 21, 2013. Topics will include:

  • A General Overview of Condominium Law
  • Common Element Alterations
  • Condominium Insurance
  • Status Certificates
  • Reserve Funds
  • Management
  • Budgeting and Audit issues.

For more details, please click here.

Grandfathering: Balancing the Flexibility and Predictability of Condominium Living

Condominium Corporations are empowered by legislation to amend their Declarations, and pass new By-laws and Rules. This means that the governing documents can change (in many cases with the involvement of the owners, as required by the legislation) and this flexibility is a critical aspect of condo living. On the other hand, there is also the counter-balancing desire for predictability. Some owners and residents rely on the governing documents as they are written. For example, if a resident has two dogs, and the corporation passes a new rule containing a one-dog limit, that owner is suddenly at a disadvantage.

Courts have held that a balance between the flexibility of creating or changing governing documents, and residents’ need for predictability can be achieved through the practice of ‘grandfathering.’ For example, suppose a resident is a smoker, and the corporation passes a new no-smoking provision, the resident might be grandfathered, meaning that they can continue to smoke in their unit. Grandfathering does not however, apply to every situation, or to every resident. If it did, the principle of grandfathering would be so broad as to effectively prevent the corporation from exercising its statutory powers to amend or pass new governing documents.

Three cases illustrate this point. The first is Durham Condominium Corporation No. 90 v. Carol Moore and Keith Wallace (Ontario Superior Court), which was released in September, 2010. In this case, the rear yard decks were part of the condo's common elements. As with any other common element, modifying the decks required board approval, pursuant to the Condominium Act, 1998, and, in this case, the corporation’s Declaration. The Board adopted the following policy: they would only approve deck modifications if the dimensions of the modified deck did not exceed the original size of the deck. At the time the policy was adopted, a few decks were 'oversized', and were grandfathered by the corporation.

After the policy change, the respondent owners installed a deck that did not conform to the board-approved plans, or to the board's new policy. The owners argued there was an element of unfairness since other 'grandfathered' decks did not have to meet the board-approved plans. Nonetheless, the Court ordered that the owners modify the deck, to bring it into conformity with the Board’s policy and the Board-approved plans. The Court stated that a condominium corporation can properly take steps to change its policies, with the appropriate grandfathering of existing conditions.

The second case is Willson v. Highlands Strata Corp., from the British Columbia Supreme Court in November, 1999. The petitioners in this case were the original purchasers of a unit. The Disclosure Statement stated that there were no restrictions on leasing the units. After turnover, the corporation passed a new by-law imposing restrictions on leasing the units. The Petitioners sought an order that they were exempt from the restrictions on leasing. The Court held that the absence of restrictions in the Disclosure statement did not prevent the corporation from imposing new restrictions on leasing. The court further held that the petitioners were not grandfathered under condominium legislation, because they leased their unit after the new by-law came into effect.

The third case is Metropolitan Toronto Condominium Corp. No 601 v. Hadbavny, from the Ontario Superior Court in October, 2001. The applicant was a unit owner. The corporation's by-laws contained a one-pet limit, which had not been enforced. When the owner moved into his unit, the owner had one dog and, noting that the one-pet rule was not enforced, subsequently purchased a second dog, which the corporation demanded be removed from the unit. The owner sought an order that the second dog be 'grandfathered.' The Court granted the order stating, "how the Board managed the pet rule over the years… created a situation in which Mr. Hadbavny could reasonably expect that if he had two dogs who were not a nuisance, he would be permitted to keep them." The Court said that the owner had relied on the board's non-enforcement of the one-pet rule "to his detriment, and purchased his second dog in the reasonable expectation that no objection would be taken to it." The corporation could not sleep on its rights, and then enforce the rules against people who relied on non-enforcement and had thereby put themselves in a position of disadvantage that they would not have put themselves in, had the provisions been enforced uniformly and in a timely manner.

In summary, when establishing a new policy, Rule, By-law or Declaration provision, it is important to bear in mind that in appropriate cases, some residents or situations should be 'grandfathered,' bearing in mind the following principles:

  • Grandfathering is intended to reflect a fair or reasonable compromise between the need for flexibility and the desire for predictability.
  • Grandfathering may be appropriate where an owner or resident has relied upon the previous circumstances or the corporation’s previous provisions.
  • Grandfathering does not apply in all cases. For grandfathering to apply, the owner or resident normally must have made a commitment that is difficult to undo, so that it would be harsh or unreasonable to impose the new requirement on the particular owner or resident. However, grandfathering normally won't make sense if the grandfathering would allow an unreasonable risk of harm to persons or property.

Important Recent Court Decision Respecting Corporation’s Repair and Maintenance Mandate

There have been very few Court decisions to help us draw the line between projects falling within the Board’s mandate and projects requiring involvement of the owners – i.e. to help explain Section 97 of the Condominium Act. But we now have a very helpful decision on point: Harvey v. Elgin Condominium Corporation No. 3.

The facts in the Harvey case were as follows:

Elgin Condominium Corporation No. 3 is a 51-unit townhouse-style condominium, with “roof decks” above the garages. Fifteen years after the original construction, the roof-decks were failing and leaking, due to “extensive construction design and implementation flaws.” The corporation’s engineers recommended that the roof decks be replaced, and offered two options:

Option 1: New wooden decks and railings (replacing the original wood); or

Option 2: Vinyl decks, coupled with aluminium railings.

The engineers recommended option 2 because it would be less costly and easier to service and maintain, and would also avoid the elevation and drainage problems of the original design. These advantages outweighed the fact that vinyl decks would require added care to avoid puncture of the decking and underlying membrane.

The Board held meetings of the owners to discuss the two options, and even held an ordinary vote of owners on the options. Out of 24 voting owners, 20 voted in favour of Option 2. The Board then chose option 2, and levied the necessary special assessments, in the amount of $10,000 per unit, to proceed with the work.

One of the owners, Mr. Harvey, objected strenuously to the proposed work and ultimately sued the condominium corporation. Among other things, Mr. Harvey said that the project constituted a substantial change to the common elements, requiring a 2/3 vote of the owners because the cost of the roof deck replacement would greatly exceed 10% of the corporation’s annual budget. He asked for an Order that the work stop and that all special assessments be reversed.

The Court dismissed Mr. Harvey’s claims, finding that the project and special assessment fell within the Board’s mandate. The Court said that the Board had the right to proceed under either Section 97 (1) or Section 97 (2) (b) of the Act. Here are some of the key extracts from the Court’s decision:

…the wording of s. 97(1) understandably contemplates a degree of latitude appropriate to the circumstances, and evolving construction knowledge and methods. Not surprisingly, our courts therefore repeatedly have held that replacement of ‘old’, ‘defective’ or ‘worn out’ common elements with ‘new’, ‘improved’ or ‘upgraded’ material, equipment or designs still constitute ‘repair’ and ‘maintenance’, and this is so even when the result has a different, more contemporary, aesthetic appearance.

…[the condominium corporation] was entitled, [and indeed obliged, pursuant to its statutory duties of repair and maintenance], to embark on the garage deck remedial work without the need for unit owner notice or approval, let alone approval by the special majority vote contemplated by s. 97 (4) [which applies to ‘substantial changes’]

This case clarifies that condo corporations are entitled, and indeed obliged pursuant to their statutory duties, to attend to repairs and maintenance, even when the proposed new features may be somewhat different than the original.