Reminder: Kingston Condo Law Primer – 2016

The deadline to register for the Kingston Primer is fast approaching and space is limited. Register now to avoid disappointment!

Hosted by Nelligan O’Brien Payne’s Condominium Law group, this not-to-be-missed event will address issues of interest to the condominium community.

Some of the topics of discussion at this seminar will include:

Here are the event details:

  • Date: April 9, 2016
  • Location: Residence Inn Marriott, 7 Earl St, Kingston (Click here for a map)
  • Time: 9:00 am – 12 pm
  • Cost: $40 (Includes HST)

To register, please click here to fill out the form and email to wanda.blakney@nelligan.ca or send by fax to 613-531-0857. If you have any questions, Wanda can be reached at 613-531-7905.

Collecting Costs from Owners

When an owner (or the owner’s tenant) causes the condominium corporation to incur costs, two questions arise:

  1. Does the condominium corporation have the right to collect those costs from the owner?
  2. Can the costs be added to the owner’s common expenses?

The Condominium Act contains some specific provisions about recovery of costs from owners. For instance:

  • If a condominium corporation is required to take enforcement proceedings against an owner and/or the owner’s tenant, the condominium corporation may be entitled to recover all reasonable costs incurred by the condominium corporation in the Court process. And the corporation will normally have the right to add those costs to the owner’s common expenses. [See Section 134 (5) of the Condominium Act.]
  • Under Section 92 of the Act, if a condominium corporation carries out maintenance or repairs on behalf of an owner, the related costs can be added to the owner’s common expenses.
  • Under Section 105 of the Act, owners may be responsible for the corporation’s insurance deductible in certain circumstances. If so, the amount is added to the owner’s common expenses.

But what about other costs caused by an owner or the owner’s tenant that are not related to a court process? This could include legal costs (for warning or demand letters), extra management costs (for special enforcement efforts), engineering costs (for special investigations) or any other costs incurred by a corporation as a result of an act or omission of an owner or the owner’s tenant.

The corporation’s right to recover those types of costs – and to add those costs to the owner’s common expenses – can often depend upon an “indemnification” provision in the corporation’s declaration, by-laws or rules.

Note as well that, in order to add such costs to an owner’s common expenses, the amendments to the Condominium Act require that the indemnification provision (specifically stating that such costs are added to the owner’s common expenses) be in the declaration.

So, all of this leads to the following questions:

a)      Does your declaration contain an indemnification provision?

b)      Is that indemnification provision well-worded?

c)      If the answer to (a) or (b) is “no”, should you perhaps be considering an amendment to your declaration (with consents from owners of 80% of the units) to add an indemnification provision to your declaration? Or maybe improve the wording of a current provision?

NOTE: Without such a provision in your declaration, when the amendments to the Condominium Act come into force, you may have to look for other ways to collect amounts owed by owners…such as a claim against the owner and/or tenant in Small Claims Court. Depending upon the specific facts, this may be a far less efficient alternative.

To read more on condominium arrears, take a look at our previous blog post.

Change is in the Air Contest – 2016 Edition – We Have a Winner!

The Condo Law News: Change is in the Air Contest – 2016 Edition is over, and we are excited to announce our winner!

Congratulations! The winner of the draw is Adrienne Leach!

Thank you to everyone who participated in this year’s Quiz. Come back to visit our blog often for updates and news on all areas of Condominium Law, and stay tuned for our next contest!

NO PURCHASE NECESSARY TO ENTER OR WIN. Open only to legal residents of Ontario who are of legal age of majority and at least nineteen (19) years of age at the time of entry. Not open to employees or immediate family members of employees of Nelligan O’Brien Payne LLP or its affiliated entities. Contest closes at 11:59 p.m. ET on Sunday, March 20th. One (1) prize available to be won consisting of waived registration fees for up to five (5) individuals to attend the upcoming 2016 New Act primer event hosted by Nelligan O’Brien Payne, and a firm merchandise prize package. Prize is valued at $250.00 CAD. Draw will be conducted on or about March 20, 2016, and winner will be announced on March 21, 2016. Odds of winning depend on the total number of eligible entries received for the drawing at issue. Mathematical skill testing question must be answered correctly to win. For full rules, please click here.

Week Four, FINAL Question: The Condo Law News: Change is in the Air Contest – 2016 Edition

Take part in the Condo Law News: Change is in the Air Contest – 2016 Edition! Enter to win five (5) tickets to our upcoming 2016 New Act Primer event, hosted by Nelligan O'Brien Payne’s Condo lawyers!*

*For full contest rules, including a description of the prize, please click here.

There will be four blog posts containing quiz questions in February/March. You will receive a ballot each time you answer a question correctly and then submit an eligible entry during the weekly contest period. For example, if you answer four questions correctly and submit eligible entries for each, you will receive four ballots. The winner will be drawn randomly and announced in a blog post on March 21, 2016. For more details on the contest, including how to enter, please click here.

The Official Week Four (and final) Question is:

One of the conditions in Section 98 of the Condominium Act requires that when an owner makes an addition, alteration or improvement to the common elements, that they enter into an agreement with the corporation, registered on title to the owner’s unit.

Bill 106 removes the requirement for Section 98 agreements. True or False?

The question period is now over, thanks for playing!

Want an extra entry into the contest? Use the hashtag!

Simply tweet or post on Facebook about the contest using the hashtag #condolawnewscontest2016 and each user will gain one extra entry into the contest.

(If your Twitter username or Facebook name does not reflect the email address you are entering the contest with, please email us at nelligannews@nelligan.ca to ensure we award you the extra entry.)

Insurance Claims – Watch out for the Limitation Period!

Our readers may know that the limitation period for most types of claims in Ontario is two years. This means that the claim must be started (by court process) within two years from when the claimant discovers or ought to have discovered the basis for the claim. Otherwise, the right to assert the claim is likely lost.

However, for many insurance claims, the limitation period maybe shorter.

Condominium corporations are sometimes required to consider claims against their insurers. For instance:

(a)    When damage is caused to the common elements or standard units, repairs may be covered by the corporation’s property insurance.

(b)   When a claim is made against the condominium corporation and/or directors, the condominium’s insurer may have a duty to defend the claim (and may have a duty to pay any judgment).

In such cases, condominium corporations must be careful to preserve their claims. In particular:

  1. As a first step, the insurer must be given prompt notice of any such claim or potential claim against the insurer.
     
  2. In addition, if there is any doubt or possible doubt about the insurer’s acceptance of the claim, the condominium corporation must start the claim against the insurer (by court process) within the applicable limitation period. And, for purposes of this second step, here’s the key point: The limitation period for such insurance claims may be shorter than the typical two-year limitation period.

The Courts have said that the limitation period for insurance claims can be determined in the insurance contract/policy. For example, many insurance policies contain one-year limitation periods (from the date of a loss) for claims against the insurer. Some policies contain one-year limitation periods under both the property insurance coverage and the liability insurance coverage.

The bottom line is as follows: Whenever you are confronted with a claim or potential claim against your insurer, be sure to consider the two steps noted above, and also be sure to check the limitation period in the policy. Again, if a claim against the insurer is necessary, it must be started by court process within the limitation period noted in the policy.

To read more about condominium insurance, check out our previous blog post.

Collecting Condominium Arrears – Some Tips

A condominium corporation’s right to lien for common expenses expires three months after the owner’s default. And the courts have now said that this lien right generally cannot be “resurrected” after the three-month limitation period has expired. But condominium corporations may wish to consider a strategy to maximize the corporation’s lien rights.

One good strategy is to apply all common expense payments (made by the owner) to the owner’s earliest arrears. This has the effect of making any remaining arrears “as recent as possible”, thereby delaying the three-month lien period.

This strategy is permitted in most cases, unless the condominium corporation has agreed to apply the payments in another manner. The general rule in law is that a creditor has the right to apply the debtor’s payments to whatever debts the creditor deems appropriate; again, unless the creditor has in some way agreed otherwise.

In order to avoid, or at least minimize, arguments about the right of the condominium corporation to apply an owner’s payments to the owner’s earliest arrears, I recommend two steps:

  1. Add a provision to the corporation’s by-laws specifically stating that all common expense payments will be applied to the owner’s earliest arrears. This avoids arguments about whether or not the corporation has agreed to apply payments in that manner.
  2. When preparing each unit ledger, be sure that the owner’s payments are in fact applied to the earliest arrears (and are shown as such on the ledger).

To read more about arrears in common expense payments, see our previous blog post.

Week Three Question: The Condo Law News: Change is in the Air Contest – 2016 Edition

Take part in the Condo Law News: Change is in the Air Contest – 2016 Edition! Enter to win five (5) tickets to our upcoming 2016 New Act Primer event, hosted by Nelligan O'Brien Payne’s Condo lawyers!*

*For full contest rules, including a description of the prize, please click here.

There will be four blog posts containing quiz questions in February/March. You will receive a ballot each time you answer a question correctly and then submit an eligible entry during the weekly contest period. For example, if you answer four questions correctly and submit eligible entries for each, you will receive four ballots. The winner will be drawn randomly and announced in a blog post on March 21, 2016. For more details on the contest, including how to enter, please click here.

The Official Week Three Question is:

Bill 106 amends the law when it comes to directors holding a meeting via teleconference, by removing the need for a by-law to authorize these kinds of meetings. However, one further contentious point remains in the Act:

(A) A majority of the directors of the corporation must agree as to the kind of teleconference technology used for the meeting

(B) All directors must be notified thirty (30) days in advance if the meeting is being held by teleconference

(C) All directors of the corporation must consent to the means used for holding the meeting

(D) All condominium owners must be notified when a director’s meeting is being held by teleconference

Take part in the Condo Law News: Change is in the Air Contest – 2016 Edition! Enter to win five (5) tickets to our upcoming 2016 New Act Primer event, hosted by Nelligan O'Brien Payne’s Condo lawyers!*

*For full contest rules, including a description of the prize, please click here.

There will be four blog posts containing quiz questions in February/March. You will receive a ballot each time you answer a question correctly and then submit an eligible entry during the weekly contest period. For example, if you answer four questions correctly and submit eligible entries for each, you will receive four ballots. The winner will be drawn randomly and announced in a blog post on March 21, 2016. For more details on the contest, including how to enter, please click here.

The question period is now over, thanks for playing!

Want an extra entry into the contest? Use the hashtag!

Simply tweet or post on Facebook about the contest using the hashtag #condolawnewscontest2016 and each user will gain one extra entry into the contest.

(If your Twitter username or Facebook name does not reflect the email address you are entering the contest with, please email us at nelligannews@nelligan.ca to ensure we award you the extra entry.)

Smoke Migration and the Obligations of the Condominium Corporation

A recent court decision, MTCC No. 985 v. Cheney, provides a nice summary of the obligations of a condominium corporation dealing with smoke migration.

In this case, the owners were forced to move out of their unit because of cigar smoke entering from a neighboring unit. The court confirmed that the condominium corporation had a duty to investigate and to take steps to resolve any common element problems that were allowing the smoke migration.

The court said that the condominium corporation had initially failed to act with sufficient dispatch, but had ultimately taken the necessary steps to investigate and deal with the smoke migration problems.

There were, however, ongoing disagreements between the complaining owners and the condominium corporation (and their experts) about the required work. The owners also asked that the corporation’s expert certify that smoke migration would not reoccur. The corporation didn’t feel that it should be obligated to supply such a report.

The court was asked to decide these disagreements. It essentially said that a condominium corporation’s obligation is to provide a reasonable result – not necessarily a perfect result.

Here are the key passages from the court decision:

The Owners now seek what amounts to a guarantee that there will be no reoccurrence [of the smoke migration]. The solution offered [by the owner’s expert] is more likely to provide that. But, in my view, it goes further than can reasonably be required. Not only would it result in wholly disproportionate remedial work being required (if one measures the expense and disruption, on the one hand, against the likely outcomes) but it would go well beyond what is reasonable and required having regard to the age and construction of the building.

To adopt the labels used by MTCC, the standard is one of reasonableness, not perfection, and on that basis, MTCC is not, in my view, in breach of its duties to repair and maintain pursuant to sections 89 and 90 of the Condominium Act, and I therefore decline to make the declarations sought by the Owners in that regard. In particular, I do not accept that I should order MTCC to deliver an engineer’s report as described in paragraph 1(e) of the Owners’ amended notice of application.

So the bottom line is as follows: a condominium corporation has a duty to take reasonable steps to investigate and resolve common element problems that may be contributing to smoke transfer. But the standard is reasonableness. The corporation is not necessarily obligated to guarantee that there will be no further smoke migration.

The Risks of Defamation in the Condominium Setting

A recent court case highlights the unique risks of defamation in the condominium setting. It also notes the special defamation defence that can be available to a condominium director.

In the case of Wan v Lau, Mr. Lau was seeking election to the condominium’s board. He sought proxies for two units that were owned by the Huang family corporation. One of the family members, Mr. Huang, signed a proxy (for the Huang family units) in favour of electing Mr. Lau. However, at the meeting, another attendee (Ms. Chiu) produced a “competing proxy” for the same units, in favour of electing a different candidate. The competing proxy was signed by Mrs. Huang. Ms. Chiu said that the proxy had been supplied to her by Mr. Wan.

The Manager contacted Mr. Huang by telephone. Mr. Huang confirmed the proxies that he had provided to Mr. Lau. Mrs. Huang was out of the country, and it wasn’t possible to reach her to confirm her competing proxy. Therefore, the proxy provided to Mr. Lau was accepted; and the proxy provided to Ms Chiu was rejected.

Mr. Lau was elected at the meeting.

After the meeting, Mr. Lau met with Mr. Huang about the competing proxy (signed by Mrs. Huang). The Court describes the meeting as follows:

Mr Huang examined the proxy and said that the signature appeared to be his wife’s. However, he was adamant that the signature could not be genuine. To his knowledge, his wife was in Hong Kong and knew nothing about the AGM. To his knowledge, his wife knew no one named “Margaret” or “Howard”.

Mr Lau asked Mr Huang to call his wife to confirm these things. Mr Huang refused. In his view there was no need. The signature could not possibly be genuine. How dare “these people” have the audacity to forge his wife’s signature? They could just as easily forge her signature on a deed selling the properties!

Mr. Lau then wrote an email to fourteen persons (including other board members, members of management and certain owners), in which he said that the competing proxy was a forgery. As it turned out, this was not the case. Mrs. Huang had in fact signed the proxy provided to Mr. Wan!

When Mr. Lau learned the truth, he immediately sent a “retraction email” in which he corrected the false statements in his earlier email and said: “If this matter has caused damage or loss to anyone, I will do my best to compensate!”.

The Court said that Mr. Lau’s first email was clearly false and defamatory of Mr. Wan. However, the Court said that Mr. Lau was not liable to Mr. Wan because of the defence of “qualified privilege”. This defence is available to any person (like a corporate director) who has a duty to report to others. The defence applies to any communication that is properly part of the person’s reporting function, as long as the report is made without malice and relates to a matter falling within the interests of the overall organization.

Here’s what the Court said:

Mr Lau was a candidate in the election for which the proxy was obtained from Mrs Huang. He was elected to the board and thus was a director of the condominium corporation at the time of his conversation with Mr. Huang. And he was also a unitholder in the condominium corporation. All three of these circumstances were sufficient to give rise to a legitimate interest to report his conversations with Mr Huang to the board of directors and/or to management of the condominium corporation. I would go further and also conclude that Mr Lau had an interest in communicating these matters to other unitholders in the condominium corporation. These communications would have, as their underlying legitimate purposes, identifying a need for further investigation into Mr Huang’s allegations that the proxy was a forgery. The directors, management, and all unitholders, had a legitimate interest in knowing that a unitholder was alleging fundamental misconduct in the conduct of condominium affairs.

So, in summary, the defence of qualified privilege (as in this case) may protect a condominium director even in the event of a truly false and defamatory statement by that director; but the key is that the reporting must be justified and without malice.

One last thing: the Court said that Mr. Lau’s “retraction letter” was only “partially effective” because it did not include specific mention of Mr. Wan’s name. The Court said:

The substance of the retraction is that the misconduct alleged by the impugned words never took place. In my view, this is a complete retraction of the impugned words. That said, I agree with Mr Wan that the Retraction should have mentioned Mr Wan by name and expressly said that he had done no wrong, contrary to what had been suggested in the impugned words. I find that the Retraction is effective, but not 100% effective, in eliminating the damage caused by the impugned words. Thus, had I found Mr Lau liable, I would have discounted the damages arising from the defamatory publication by 80% because of the swift publication of the Retraction.

So the lesson here is: Condominium Directors do have certain protections when it comes to defamation. But it’s still always best to carefully check the accuracy of a planned publication before pressing the “send” button!

Upcoming Kingston Condo Law Primer – 2016

Back by popular demand, the Kingston Condo Law Primer is taking place on April 9th at the Residence Inn Marriott!

Hosted by Nelligan O’Brien Payne’s Condominium Law group, this not-to-be-missed event will address issues of interest to the condominium community.

Some of the topics of discussion at this seminar will include:

Space is limited, register now! Here are the event details:

  • Date: April 9, 2016
  • Location: Residence Inn Marriott, 7 Earl St, Kingston (Click here for a map)
  • Time: 9:00 am – 12 pm
  • Cost: $40 (Includes HST)

To register, please click here to fill out the form and email to wanda.blakney@nelligan.ca or send by fax to 613-531-0857. If you have any questions, Wanda can be reached at 613-531-7905.