Corporation Recovers Extensive Costs It Has Incurred to Recover Past Arrears

In our blog post from July last year, we reported on a case where a condominium corporation had spent several years in court in its efforts to collect common expense arrears, and the related costs and disbursements. As reported, the various decisions of the Superior Court, and the cost decision following the ultimate trial of the issue, resulted in the following findings:

  • The unit owners had liability for fees in the amount of $490,410.00 (pursuant to a partial Summary Judgement and the further Trial of the Issue); and
  • Pursuant to section 85(3) of the Condominium Act, 1998, the condominium corporation was entitled to full indemnification of its reasonable legal fees and disbursements, which amounted to a total of $790,914.63.

Today, the Court of Appeal dismissed the appeal of both the trial and cost decisions.

To me, this decision brings some comfort to condominium corporations that are acting reasonably and diligently to collect arrears, but are nevertheless faced with lengthy, challenging, and costly disputes.

The Court of Appeal has confirmed that where the fees and disbursements are reasonably incurred in the proper collection of arrears, even if the fees and disbursements are not proportional to the arrears recovered, full indemnification pursuant to section 85 is warranted.

In my view, this is wholly in keeping with the intent of section 85 of the Condominium Act, and the need to ensure that innocent owners are not financially penalized for costs incurred to collect outstanding arrears.

Five Months Considered a Reasonable Timeframe to Adopt Policy Under A Human Rights Settlement

A recent decision by the Human Rights Tribunal, Luk v. York Condominium Corporation No. 382, recognizes that it can take some time for a condominium board to implement a policy to investigate complaints about owners.

In this case, five months was considered a reasonable timeframe for the board to implement the policy, because the Condominium Corporation addressed complaints while the policy was being prepared.

The dispute began with a settlement agreed to by the parties, under which the Condominium Corporation was required to institute a policy “pursuant to which it would investigate any complaints that owners or residents have violated any of the condominium’s rules, and if substantiated, take what it deems to be appropriate action in accordance with the Human Rights Code, the Condominium Act and any other applicable statutes or law.” No deadline for doing so was set in the settlement.

The complainant brought a further application in the Human Rights Tribunal (less than two months after the minutes of settlement were signed) that the Condominium Corporation had breached the minutes of settlement by failing to implement the policy in a reasonable period of time.

The policy was adopted five months after the minutes of settlement were implemented.

The Tribunal was sympathetic to the owner’s position that, because of verbal threats experienced by some residents, the Condominium should have adopted the policy on an urgent basis. However, the Tribunal accepted the Condominium’s position that it took residents’ complaints seriously and acted on them, thus mitigating the need to adopt the policy urgently.

The Tribunal found that the Board adopted and implemented the policy within a reasonable timeframe.

The Tribunal also stated that the Condominium was diligent in developing its policy, especially given the election of a new Board during that period, the fact that the Board only meets monthly, and also that the process included a review by legal counsel.

This decision recognizes that the process of a Board of Directors in managing the affairs of the Condominium Corporation can often take time, and instantaneous results should not be expected.

Pub Night and Welcome Reception for the ACMO-CCI EO 4th Annual Conference

What better way is there to start the 4th Annual ACMO-CCI EO Condominium Conference than with a pub night! Come out Property Managers, Board Members and Contractors, to mingle and meet your condominium colleagues and friends on Thursday evening at the Pub Night and Welcome Reception for the ACMO-CCI EO 4th Annual Conference.

The evening at Dooly’s Pool Hall includes a buffet dinner and cash bar, pool tables and prizes! Best of all, there is no cost to attend, but register now to reserve your place (there are only 100 tickets available).

Here are the details:

  • Date: Thursday May 26, 2016
  • Time: Registration is at 6pm, with a buffet dinner from 6:30pm.
  • Location: Dooly’s Pool Hall, 2279 Gladwin Crescent, Ottawa, ON K1B 4K9, Canada.

To register, visit the CCI website here.

Ontario Human Rights Tribunal Finds That Co-op Board Failed to Properly Respond to Harassment of Former Board Members

A recent decision of the Ontario Human Rights Tribunal, involving harassment at a co-operative corporation, may also be important for condominium corporations.

In the case of Welykyi v. Rouge Valley Co-operative Homes Inc., the Tribunal held that the Co-op’s Board of Directors had failed to adequately address harassment of members of the community. Briefly, the facts were as follows.

There was tension between a previous group of Board members and the new Board. This tension stemmed from a dispute about the alleged use of Co-op funds to renovate a particular Board member’s unit. Between April 28, 2012 and September 15, 2012 an anonymous and unidentified person wrote or posted eighteen upsetting and disparaging messages about certain members in the Co-op. Some of the targeted members were from the previous Board.

Some of the messages referred to specific individuals and their unit numbers. The content included terms related to disability, race, sex, gender identity, ancestry, age or receipt of public assistance. These are prohibited grounds of discrimination in relation to the occupancy of accommodation under Ontario’s Human Rights Code. The messages were posted around the Co-op, in the mail room, on specific members’ doors and written on the walls of the elevators.

The new Board had made some efforts to deal with the harassment. For instance, the Board sent notices to all members (instructing against vandalizing the property) and ultimately sent a further notice against the specific postings. The Board also relocated two security cameras and installed twenty-two fake cameras. The Board also offered mediation to some of the members affected by the postings. At the same time, the Board had asserted that there was only so much that could be done, because the culprits could not be identified.

The Human Rights Tribunal said that the Board’s efforts were not enough, and held that the Board was in violation of its obligations (under the Human Rights Code) to take reasonable steps in the face of such harassment.

The Tribunal noted that the Co-op had no harassment or discrimination policy, and also no training in relation to such matters. But, more importantly, the Tribunal said that the Board had failed to respond properly to the particular incidents. Here’s the key extract from the decision:

In my view, the formal processes and policies that a housing provider may have in place are less important than what it actually does once it receives a complaint of harassment. Whether the respondent’s reaction to complaints of harassment was reasonable, depends, as noted, on the unique circumstances of each case. One of the unique and obvious characteristics of this case was that the harassment experienced by the applicants was egregious and persistent. In this context, the evidence does not support the respondent’s contention that it took the matter seriously or addressed it with a sense of urgency. In my view, the respondent’s most significant failure was the complete absence of communication with the applicants. In my view, when a respondent receives a human rights complaint it should acknowledge the complaint, assure the complainant(s) that the complaint is important, and that action will be taken to address it. In ongoing situations such as this one, a respondent should maintain contact with the complainant(s) and keep them apprised of the actions the respondent intends to take. Such communication is particularly important in the housing context, where a housing provider does not have control over the residents and therefore has limited ability to investigate and address complaints. An employer, by contrast, can compel its employees to participate in investigations and may take action even when investigation results are inconclusive. In cases of surreptitious harassment, such as this one, it may not be possible to catch the culprit, but the victims must be assured of their right to live in an environment free from discrimination and harassment. The evidence was that the Co-op never contacted the applicants about the flyers.

The Tribunal awarded each complainant $3,000 to compensate for the failure of the Board to adequately investigate and address the complaints. The Tribunal also ordered the Board to inform all members of the Co-op about the award and to post copies of the decision on the Co-op bulletin boards for a period of six months.

In my view, there is a real possibility that these same concepts could be applied to a condominium corporation. For these purposes, Co-ops and condominiums are very much analogous.

Of course, the obligations under the Human Rights Code are only triggered in cases of harassment on prohibited grounds of discrimination. Note, however, that a condominium corporation may have separate obligations to address many types of harassment on the condominium property, because of the corporation’s duties (in Section 17(3) of the Condominium Act) to take reasonable steps to enforce the Condominium Act, and the corporation’s declaration, by-laws and rules. Even if harassment does not involve prohibited grounds under the Human Rights Code (so that a claim to the Human Rights Tribunal is therefore not a possibility), harassment may often violate Section 117 of the Condominium Act, or provisions of the corporation’s declaration, by-laws and rules.

To read more about human rights issues in condominiums, see our previous blog post on human rights insurance.

Upcoming Belleville Condo Law Primer 2016

The Condo Law Primer for Belleville is taking place on June 17th at the Fairfield Inn & Suites.

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, so register now! Here are the event details:

  • Date: June 17, 2016
  • Location: Fairfield Inn & Suites by Marriott, 407 North Front Street, Belleville K8P 3C8
  • Time: 1:00pm to 4:00pm
  • Cost: $40 (includes HST)

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

Status Certificates – The Risks for Managers

The recent court decision in the case Metropolitan Toronto Condominium Corporation No. 673 v St. George Property Management Inc. shows the potential risks posed by an inaccurate status certificate. Very briefly, the facts of the case were as follows.

The property manager was responsible for preparing the status certificates for the condominium corporation. The property manager prepared and issued a status certificate that contained mistakes. In particular, it failed to disclose a potential special assessment (due to required roof replacement), and also failed to disclose details of an expropriation. Because of the mistakes, the condominium corporation incurred significant costs to deal with a dispute between the condominium corporation and the purchaser who received the status certificate. The corporation’s own costs as well as court costs payable by the corporation to the purchaser totaled almost $100,000.

In a separate court process (between the corporation and the purchaser), it was determined that the purchaser could not be forced to contribute to the special assessment for the roof replacement, because of the inaccurate status certificate. So, in that sense, the purchaser’s claim against the condominium corporation succeeded (again, because of the inaccurate status certificate). However, the condominium corporation had also received expropriation funds – from an expropriation of a portion of the condominium property by the City of Toronto. Those expropriation monies were deposited to the reserve fund, and served to essentially off-set the special assessment. So, in that sense, the purchaser hadn’t ultimately suffered any resulting loss. In the end, the purchaser wasn’t awarded any damages, but the court still awarded the purchaser costs of $15,000, I think perhaps because the whole dispute was the result of the inaccurate status certificate.

The condominium corporation then sued the Manager for recovery of the costs incurred by the corporation (the roughly $100,000 noted above) – and was successful. The Court said:

I find that the Property Manager failed to carry out its performance obligations with respect to the preparation of the status certificate for the Unit 13 Purchaser and that the Condominium Corporation was harmed to the extent of $97,182.68. The indemnification clause (in the Management Contract) applies to the circumstances of this case.

This is another cautionary tale about status certificates. The moral is as follows: when preparing status certificates, always make sure that they are complete and accurate.

To read more about status certificates, check out our previous blog post.

How to Participate in the Tarion Review Process

As mentioned in my previous blog post, Ontario recently initiated a review of Tarion Warranty Corporation. I was honoured to be invited to participate as a member of a “focus group” to provide feedback about Tarion to the Honourable Justice Cunningham, who is undertaking the review. 

Details about the province’s review of Tarion can be found at the Ministry of Government and Consumer Services website here.

Note, in particular, that public consultations have now been scheduled, for anyone who may be interested in participating in the review process. For instance, meetings have been scheduled to take place in Ottawa and Kingston, as follows:

Ottawa

Location:        Ramada Ottawa on the Rideau

                         2259 Prince of Wales Drive, Ottawa, ON K2E 6Z8

                         Room: Riverview 

Date:               Tuesday, May 31, 2016

Times:             2:00 p.m. – 4:00 p.m. (Industry/Organization consultation)

                         5:00 p.m. – 7:00 p.m. (Public consultation)

Kingston

Location:         Holiday Inn Express &Suites

                          33 Benson Street, Kingston, ON K7K 5W2

                          Room: Loyalist

Date:                Monday, May 2, 2016

Times:             2:00 p.m. – 4:00 p.m. (Industry/Organization consultation)

                         5:00 p.m. – 7:00 p.m. (Public consultation)

The province’s website includes the following notes: 

Please RSVP before the session of your choice by emailing TarionReview@ontario.ca. Please put 'RSVP’ and the city of your choice in the subject line.

Space may be limited so please register a minimum of 5 business days prior to the session date to secure a spot.”

As described on the website, you can also provide feedback by email, if that is your preference.

If you’re interested in offering feedback or other commentary about Tarion, this is your opportunity!

 

Are Drones Allowed on Condominium Property?

Our readers who keep up with the current advances in technology know that drones are becoming increasingly popular. But with this popularity comes questions about how drones are used.

Recreational drones are largely unregulated

The term “drone” is the common name for an unmanned aerial vehicle. A drone is, essentially, an aircraft without a human pilot on board, and they are used both recreationally and commercially. Typically, the pilot operates the drone by using controls from the ground. Depending on the model, drones can have a flight range of several hundred kilometers at various altitudes. Some drones have cameras for aerial pictures or surveillance.

It is interesting that some experts argue that commercial drones are a viable option to be used by Canada Post to expedite postal delivery to isolated areas. In fact, the online retailer Amazon announced years ago that it is developing drones to deliver customer’s packages faster than mail delivery…even in Canada!

With this increased drone use, Transport Canada now regulates drone operation where they are being used commercially for work or research. Despite this, there is little regulation of recreational drone use amongst hobbyists.

So what does this mean for condominiums?

Increasingly, condominiums are facing issues with drone use on condominium property. With this increase comes a concern about noise, safety and security, privacy, and nuisance, which condominiums will have to consider.

The purpose of section 58 of the Condominium Act is to ensure condominiums create rules to promote the safety, security, and welfare of owners and their property, and to prevent unreasonable interference with condominium residents’ use and enjoyment of the property.

With this purpose in mind, condominiums that are experiencing drone activity on their property are well within the purpose of section 58 to pass a rule respecting drone use.

It is up to each condominium to consider the nature and extent to which drone use may be regulated and to draft rules accordingly. If drones are currently being used and are going to be permitted, the condominium will have to take the appropriate precautions to protect owners; for example, by restricting the time and location of drone use. Or the condominium may consider a complete prohibition.    

Ultimately, whether drones will be allowed on condominium property is a context-specific decision for each condominium to consider. But in our view, rules regulating or prohibiting drone use are valid under section 58 of the Condominium Act.

Our readers in the condominium industry are welcome to contact our Condominium Law Group with any questions about the potential impact of drone use in their condominium.