Concerns re Proposed Condo Act Amendments – Concern #2

As mentioned in previous posts, Bill 106: Protecting Condominium Owners Act was introduced in the Ontario Legislature on May 27, and the full text of the bill is now available here.

Many of the proposed amendments to the Condominium Act, 1998 (“the Act”) look very good to me. However, I do have some concerns. This is Concern #2.

Concern #2 – Access to the Units

Currently, Section 19 of the Act says that a condominium corporation can gain access to a unit or exclusive-use common element – at a reasonable time and on reasonable notice – in order to perform the objects and duties of the corporation, or to exercise the powers of the corporation.

This has consistently been interpreted to allow a condominium corporation to gain access to a unit without prior notice “in the event of an emergency” (because in an emergency, it’s reasonable for the condominium corporation to gain immediate access and then to provide notice to the owner after-the-fact). This is also confirmed in many (but not all) condominium declarations or by-laws.

The proposed amendments to the Act include a provision to add the following Section 19 (2) to the Act:

“Subject to any conditions or restrictions in the regulations, the declaration or a by-law may permit the corporation or a person authorized by the corporation to enter the unit or part of the common elements of which the owner has exclusive use without prior notice to the owner in the event of an emergency or other event or circumstance as is prescribed.”

So, this means that in the case of an emergency – like a fire or water escape incident, or an occupant in serious distress – the corporation can’t enter the unit without prior notice, unless there is a provision allowing for such in the declaration or in a by-law of the corporation.

I don’t understand why this is being proposed. In my view, all condominium corporations should have the right to gain access, without prior notice, in the case of an emergency – whether or not there is any provision for such in the corporation’s declaration or by-laws. Otherwise, a condominium corporation could lose the ability to prevent serious harm to persons, to the property, or to all owners – just because there isn’t such a provision in the declaration or by-laws. I think the Act should simply confirm that corporations have this access right (without prior notice) in the case of an emergency.

Concerns re. Proposed Condo Act Amendments – Concern #1

As mentioned in previous posts, Bill 106: Protecting Condominium Owners Act was introduced in the Ontario Legislature on May 27, and the full text of the bill is now available here. If passed, this bill will make crucial changes to the administration and operation of condominiums, which will affect both condo corporations and owners across Ontario.

Many of the proposed amendments to the Condominium Act, 1998 (“the Act”) look very good to me. However, I do have some concerns, which I will be blogging about in the coming weeks. This is my blog post on Concern #1.

Concern #1 – Responsibility for the Deductible on the Corporation’s Insurance Policy

Currently, Section 105 of the Act outlines the following:

  • In the case of insured damage (i.e. damage of a sort covered by the corporation’s insurance), the corporation is responsible for the deductible except in cases where an owner or occupant negligently causes damage to his or her own unit.
  • However, the corporation can pass a by-law to extend the owner’s responsibilities in relation to the corporation’s deductible.

Many condominium corporations have passed such “insurance deductibles by-laws”. The terms of such by-laws may vary from condominium to condominium, but in most cases the by-law says that owners are responsible for the deductible on the corporation’s policy in the following circumstances:

  1. Where the owner, or an occupant of the owner's unit, or a guest or agent of the owner, negligently causes damage to any part of the property.
  2. In the case of insured damage to the owner's unit.

Many condominium corporations (and their owners) feel that such by-laws make very good sense, for a number of reasons:

  • Without such a by-law, condominium owners are essentially forced, in most circumstances, to “self-insure” (through their common expenses) for the relatively large deductibles on corporation policies.
  • In most cases, the owner’s insurance will include coverage for losses falling within the corporation’s deductible. Therefore, owners are often already paying for this coverage. Without a by-law, the owners end up paying twice for losses falling within the corporation’s deductible – because the ownership as a whole will cover the cost through common expenses (rather than taking advantage of the existing coverage under unit policies).
  • Such by-laws also render the owners responsible for the deductible in the case of damage negligently caused to any part of the property – not just to the owner’s unit (which is a current weakness in Section 105).
  • Another important consideration is as follows: If owners have increased responsibility for the corporation’s deductible, then this may reduce insurance claims, because owners may do more to avoid or to minimize insured events.

The proposed amendments to the Act include the following proposed changes to Section 105:

  1. An owner would be responsible for losses falling within the corporation’s deductible where the owner or an occupant of the owner's unit negligently causes damage to any part of the property. This, I think, makes good sense. It partially resolves the current weakness in Section 105. However, I think that owners should also be responsible for the deductible in the case of damage negligently caused by a guest or agent of the owner.
  2. The obligations of owners (in relation to the corporataion’s deductible) could be changed by a provision in the declaration. A proposed amendment to Section 107 of the Act would also say that any amendment to the declaration – to add such a provision – would require consents from the owners of 90% of the units.

This would appear to eliminate all existing and future insurance deductibles by-laws. I don’t understand why this is being proposed. Such by-laws are passed with the support of the owners of a majority of all units. I don’t see any good reason for insisting that these reasonable provisions respecting responsibility for insurance deductibles be contained in the declaration.

Recovering costs when a condominium corporation is in arrears

After many years of turmoil, a condominium corporation may now be in a position to recover the extensive costs it has incurred to recover past arrears.

The decision from March this year concerned CCC #396 is a 33-unit commercial condominium. Twenty-three of the thirty-three units are owned by related parties, including family members and/or corporations owned and operated exclusively by family members. For several years, the owners of the 23 units failed to pay (either partially or in full) the common expenses or special assessments attributable to these units. As a result, the condominium corporation was required to levy additional special assessments to cover shortfalls in the fees, and clearly faced financial distress.

Liens were registered against the units, and collection proceedings were commenced, culminating in numerous orders and decisions of the Court. In previous decisions, the Court concluded that the liability for fees due from the owner to the Corporation amounted to $490,410. Most recently, the Court released its decision with respect to the extensive costs incurred by the Corporation in these proceedings.

In short, the Court concluded that because these proceedings were commenced for collection of arrears registered pursuant to section 85 of the Condominium Act, 1998, the condominium corporation was entitled to its reasonable legal fees and disbursements in accordance with section 85(3), which amounted to a total of $790,914.63. In its decision, the Court considered proportionality, and whether the fees being claimed were excessive given the amount of recovery. In light of the specific facts of this case, which are detailed in the decision, the Court concluded that the fees were reasonable, and recoverable, pursuant to section 85 of the Act.

Meanwhile, the Defendants have appealed both the trial and cost decisions.

Pest Infestations and the Duty to Maintain and Repair

Condominium owners and condominium corporations alike have obligations to fulfill in their unique relationship with one another. The Condominium Act, as well as the Declaration, By-Laws, and Rules of a condominium itself, set out these obligations in detail. But what happens when one side does not hold up their end of the bargain?

In the recent decision Carleton Condominium Corp. No. 25 v Eagan, which was a Court Application (at the first instance) to the Ontario Superior Court of Justice, the Court exercised its authority to order an owner to comply with his responsibilities to repair and maintain his unit. The unit was excessively cluttered with debris and personal items, and was infested by bed bugs. In an effort to avoid Court involvement, and in an attempt to assist a member of its own community, the Board worked very hard over the course of a year and a half to secure the cooperation of the unit owner in order to address the condition of his unit. Although some progress was made, ultimately the Board was not successful, and as a result was required to commence a Court Application to have the condition of the unit addressed.

The Court found that the unit owner had breached his duties to repair and maintain his unit. The Court gave the unit owner 30 days to clean his unit and prepare it for pest control treatment, failing which the condominium corporation would be granted immediate and ongoing access to the unit for the purposes of cleaning and treating. The Court further gave the condominium corporation the specific authority to decide which unit contents will be removed, discarded and/or placed in storage.

This case is a reminder of the fact that all unit owners have a duty to comply with their obligations to repair and maintain their units – and when they don’t, there are significant consequences, not the least of which is financial. However, it is also an excellent reminder that condominiums are communities, and each member of the community has an obligation to everyone else in that community.

The decisions and activities undertaken by each member of the condominium community may have a direct impact on the other members of that community. As a result, each unit owner must be held accountable for the decisions that he or she makes with respect to his or her unit. Conversely, condominium corporations have a duty to ensure that appropriate steps are taken to address the unique circumstances that will inevitable arise any time it deals with issues of non-compliance.

In the case of Carleton Condominium Corp. No. 25 v Patrick Eagan, the Board appropriately took all reasonable steps in the circumstances. These included appropriate monitoring of the condition and infestation within the unit, keeping the unit owner informed of the steps taken and to be taken by the Corporation, and, ultimately, engaging the Courts as necessary to ensure compliance and to minimize the impact of one owner’s decisions and activities on the other members of the community.

If your condominium is dealing with a similar situation of a pest infestation in a unit, the following lessons may be taken from this case:

  • Where the unit owner fails or refuses to carry out and/or permit the appropriate treatment of the pest infestation, the unit owner may be in breach of his/her repair and maintenance obligations under the Act
  • Proper inspection of the unit in question, including ongoing monitoring, is key to ensuring the impact on neighbouring units is minimal
  • Wherever possible, work with the unit owner to address the condition
  • Wherever necessary, engage appropriate authorities (including the fire inspector’s office) to ensure the unit complies with all laws and regulations (including the Fire Code)
  • If required, engage the Court system to ultimately achieve compliance by the owner in question.

Ontario Court of Appeal rules that condominium owners are entitled to a reasonable expectation of privacy in the condominium building

In the recent case of R v. White, the Ontario Court of Appeal considered whether or not residents in condominiums are entitled to a reasonable expectation of privacy.

This was an appeal from a decision by the trial judge to acquit Mr. White on a series of drug-related offences because the trial judge found that the evidence on which the warrant was based had been obtained in breach of White’s constitutional rights. The primary question on the appeal was: To what extent did the accused have a reasonable expectation of privacy in the common areas of his condominium building?

Mr. White co-owned a unit in a 10-unit condominium apartment building. One of the police detectives entered the condominium building, without anyone’s permission, by following a postal employee who was entering the building to deliver mail. Once inside the building, the detective traversed the common element corridors and stairs and arrived at the basement, where he was able to observe some of the contents of Mr. White’s caged locker.

The detective entered the building on a few more occasions, again without permission, to observe the activities of a second suspect who was visiting Mr. White’s apartment. On the last occasion, the other suspect left Mr. White’s apartment carrying a box. He was later apprehended by police and the box was found to contain cocaine and marijuana.

Partly on the strength of the foregoing information, the police obtained a search warrant for Mr. White’s condominium unit and for two other properties. Those searches revealed numerous pieces of evidence relied upon by the crown in the criminal process.

The trial judge held that the police had no right to enter the condominium building without permission. As a result, the search warrant, which was obtained based on the strength of the illegally gathered information, violated the rights of the accused under the Canadian Charter of Rights and Freedoms.

The Court of Appeal upheld the trial judge’s decision and reconfirmed that condominium owners have reasonable expectation of privacy within the common areas of their condominium building. The Court stated:

I accept that the reasonable expectation of privacy may be attenuated in the context of multi-unit buildings, where common areas including hallways, stairwells, and storage rooms are shared by the residents, but as I have said, the reasonable expectation of privacy does not disappear. Those who live in multi-unit dwellings are no less entitled to the protection of their privacy than those who live in single family homes, albeit that the nature and extent of the expectations of privacy that they might reasonably hold may differ.”

In addition, the Court of Appeal stated that the reasonable expectation of privacy is a contextual analysis – the smaller the building, the higher the reasonable expectation of privacy.

What does this mean for your condominium? If police are conducting an investigation that involves entering onto the common elements of a condominium, the Corporation may receive a request for permission to enter onto the property from the police. The Corporation will then face the dilemma of having to decide whether or not to grant law enforcement authorities access to the common elements so they can carry out investigations that may or may not be directly related to condominium affairs.

In appropriate circumstances, the Board can properly permit the police to enter onto the common elements. However, whether to grant permission will need to be assessed on a case-by-case basis.

The Meaning of Family

A recent Superior Court decision, Ballingall vs. CCC 111, dealt with the dilemma of the dissenting director, and the circumstances that may constitute bad faith on the part of the director. See my previous blog post on those issues for more information. The court also dealt with another important issue: the meaning of “family”.

In the Ballingall case, the condominium’s declaration contained a provision stating that the units could be used only as private single family residences – but contained no definition of the term “family”. The corporation’s legal counsel recommended that the corporation pass a rule to establish a definition of family. Otherwise, the narrow definition endorsed by the courts in other cases might be imposed upon the condominium corporation (see Nipissing Condominium Corporation No. 4 v. Kilfoyl and Chan v. Toronto Standard Condominium Corporation No. 1834).

The court in the Ballingall case confirmed that it is proper for a condominium corporation to pass a rule in order to create an alternative definition of family, different from the definition endorsed in the cases above, as long as the rule is reasonable and is consistent with the basic principles behind the “families only” provision in the declaration.

I think this is great news for condominium corporations and their owners, because it means that they have some flexibility in establishing a definition of family for their condominium community. I also believe that the definition could even vary somewhat from condominium to condominium, depending upon the nature and history of the occupancies.

The court in the Ballingall case also considered the possibility for different types of grandfathering provisions to be included in any such rule. Again, this will depend upon the nature and history of the occupancies in the condominium.

These are all important considerations for any condominium corporation that has a “families only” provision in its declaration or rules.