Changes Are Almost Here…Important Dates To Keep In Mind

We’ve been waiting for changes to the Condominium Act, 1998 for years. Five years to be exact.  On June 8, 2012, the Ministry of Consumer Services announced that the Government was to launch a “Condo Review Consultation.   On December 3, 2015, Bill 106, Protecting Condominium Owners Act, 2015 received Royal Assent.  Since then, we’ve been watching and waiting as the regulations have been drafted.

After much anticipation (and trepidation) the Phase I changes are coming into force.  Here are some important dates that you need to be aware of:

November 1, 2017:

• Phase 1 of the amendments to the Condominium Act, 1998, come into force. These changes address:

Information Certificates (to be issued by condominium         corporations)

Notices from corporations to owners and mortgagees

Required Disclosure by Directors and Director Candidates

Mandatory Training for Directors

New Procedures in relation to Meetings [If you have a meeting scheduled on or after December 10, 2017 see below for requirements that apply.]

Quorum and Voting

Voting Requirements for By-laws

Record-keeping and durations

Access to records

For more details, click here for Jim Davidson’s article in Condo Contact.

• The licensing provisions of the Condominium Management Services Act, 2015 (“CMSA”) come into force.

• The Condominium Authority Tribunal (CAT) will begin accepting applications. Disputes about records will be the first type of dispute that can be filed with the CAT.

• The Condominium Management Regulatory Authority of Ontario is to be designated as the administrative authority for the CMSA.

November 25, 2017:

Condo Act Primer hosted by Davidson Houle Allen Condominium Law –   Join us as we complete a walk-through of the Phase I Condominium Act amendments, with ample opportunity for questions. For more details, click here.

December 10, 2017

• If you have a meeting of owners scheduled on or after December 10, 2017 (that you did not provide notice of prior to November 1, 2017) you must comply with the new procedures in relation to meetings, including the Preliminary notice requirements and new prescribed forms (expected to be available soon!) for Meeting Notices and proxies.

December 31, 2017

• All Condominium Corporations must be registered with the Condominium Authority of Ontario and fees from September 1, 2017 to March 31, 2018, must be paid. What happens if you don’t register?  Review our blog to see.

• This is the final date for a Corporation to provide a Periodic Information Certificate (PIC) if the last day of the first quarter fiscal end or third quarter fiscal end is on November 1, 2017.

• A PIC must be delivered within 60 days of the end of the first and third fiscal quarter.  Be sure to review the fiscal end date for your first and third fiscal quarter and set reminders that your PICs are due within 60 days of those dates.

[Note: To see if your condominium qualifies for an exemption from producing information certificates, check out our blog respecting exceptions.]

February 1, 2018

• The remainder of the changes to the Condominium Management Services Act, 2015 come into force.

Appeal Court Confirms Owner’s Obligation to Prove Case When Challenging Lien

In the recent decision Washington v. York Condominium Corporation No. 441, the Divisional Court confirmed that when a unit owner challenges a lien, it is the unit owner’s obligation to establish, on a balance of probabilities, that he or she was not responsible for the alleged damage.  In this case, the appellate judge set aside a lower court decision ordering a condominium corporation to return a chargeback to a unit owner.

This case concerned a plumbing blockage that affected the plaintiff owner’s unit, along with three other units, in the condominium.  The owner (and plaintiff) used his unit to prepare food for Caribbean cuisine dishes for restaurants.  Apart from the plaintiff, no other owners involved used their units in a way that produced food grease.

After discovering the blockage, the plaintiff contacted a plumber to assess the situation.  The same plumber was then hired by the property manager to clear the blockage.  The plumber’s notes revealed the caused of the blockage was from grease or hardened grease.  In addition, the plumber filmed the actual clearing of the blockage in which he states that the blockage is “grease and chicken grease”.

Based on the above information, the Board of Directors concluded that the plaintiff’s unit was the cause of the blockage, and demanded payment for costs incurred in the amount of $17,336.84.  Later, the condominium registered a lien against the plaintiff’s unit.  The plaintiff paid the above-noted amount and commenced an action claiming his unit was not the cause of the plumbing blockage.

The trial judge agreed with the plaintiff and rendered judgment in his favour.  The trial judge reasoned that, based on the totality of the evidence, the condominium failed to definitively prove that the source of the blockage was from the plaintiff’s unit.

The Divisional Court disagreed.  It confirmed that it was the plaintiff’s obligation to establish, more likely than not, that he was not the source of the plumbing blockage.  The Divisional Court also stated that the trial judge failed to consider key evidence: the audio of the above-noted video; and the reasoning of the Board of Directors to conclude the plaintiff was the source of the blockage.  The trial judge had discounted the reasoning of the Board of Directors on the basis that the members were “irresponsible” and “rather flippant” in their decision because their discussion of the subject was “laden with expletives”.  In other words, the members were excessively cursing.

The Divisional Court disagreed with the trial judge’s consideration of the evidence because it did not accord with the required degree of deference to which a Board of Directors of a condominium corporation is entitled, as outlined by the Ontario Court of Appeal.  Following the argument of our very own Christy Allen, the Ontario Court of Appeal in 3716724 Canada Inc. v. Carleton Condominium Corp. No 375 confirmed that courts should be careful not to usurp the functions of the boards of condominium corporations, especially when the Board has acted reasonably, honestly, and in good faith.

Overall, this decision serves as a reminder to condominium corporations that if an owner challenges a lien, it is the owner’s obligation – and not the condominium’s obligation – to establish that he or she was more likely than not, not the source of the alleged damage.  While the owner bears this onus of proof, the condominium is always open to lead evidence that will result in the plaintiff failing to establish his or her case.

Examination of Records – Do Condominium Owners Need a Proper Reason?

The Courts have said that condominium owners may be required, in some cases, to provide a proper reason for their requests to see records of the corporation.  This is important in order to prevent unwarranted “fishing expeditions” and to otherwise prevent owners from requesting records for improper reasons (for instance, only for the purpose of pestering or bothering the Board).

For instance, in the recent case of Lahrkamp v. MTCC No. 932 (click here to read the decision: Reasons For Judgment of J. Prattas), the decision of the Toronto Small Claims Court included the following:

“In my view, the inevitable conclusion to be drawn from the plaintiff’s conduct and dealings related to his requests for access to records over the years was that the plaintiff was not genuinely interested in looking into certain specific aspects of the financial operations of the defendant but was either oblivious to the fact that he was wasting other people’s time and money or, more likely, that he took a certain delight in pestering the Board and others with his demands.”   

For some of the owner’s requests – for proxies and Board minutes – the Court established a protocol for the records to be made available to the owner, subject to the owner covering costs (set by the Court) for copying and redacting those records.

For other requests – for owners lists, General Ledgers, Accounts Receivable Ledgers, Bank Statements, Portfolio Valuation Summary Details and Transaction Summary Details – the Court rejected the owner’s requests, in some cases because the owner did not have a proper reason for the request.

This legal principle (the need for owners to have a proper reason for their requests to see records) is based upon Section 55 (3) of the Condominium Act, which currently says that owners can examine records of the corporation “for all purposes reasonably related to the purposes of this Act”.  (Requests for records are of course also subject to exceptions otherwise listed in Section 55.) 

Under the coming amendments to the Act, those words – “for all purposes reasonably related to the purposes of this Act” – will be removed from Section 55 (3).   However, there will be new regulations respecting access to Records.  The new regulations will include the following:

Examination of records

13.3 (1) The right to examine or obtain a copy of a record under subsection 55 (3) of the Act does not apply unless,

(a) an owner, a purchaser or a mortgagee of a unit requests to examine or obtain the copy and the request is solely related to that person’s interests as an owner, a purchaser or a mortgagee of a unit, as the case may be, having regard to the purposes of the Act; or

(b) a duly authorized agent of an owner, a purchaser or a mortgagee of a unit requests to examine or obtain the copy and the request is solely related to the interests of that owner, purchaser or mortgagee of a unit, as the case may be, having regard to the purposes of the Act.

(2) Despite subsection (1), a person entitled to examine or obtain copies of records under subsection 55 (3) of the Act is not required to provide the corporation with a statement of the purpose of the request.

So in summary, the new regulations (expected to come into force on November 1, 2017) say that an owner’s request to see records must be solely related to the owner’s interest as an owner…. having regard to the purposes of the Act  But the new regulations also say that the owner can’t be asked to state the purpose for the owner’s request.

It’s difficult to predict how the new regulations will be interpreted and applied by the Courts and/or the new Condominium Authority Tribunal, but here’s how it looks to me:

• Condominium corporations won’t be able to ask for a reason or explanation for an owner’s request for records.

• However, if it appears (based upon all of the surrounding circumstances) that the owner does not have a proper reason for a particular request, then I think that it may still be proper to refuse the request.

Congratulations to the Newly Constituted Board of the CCI – Eastern Ontario Chapter

As many of our readers know, last night was the Annual General Meeting for the Canadian Condominium Institute – Eastern Ontario Chapter. We are pleased that Nancy Houle, partner with our firm, will have the opportunity to continue to service the condominium community as a member of the Board of the Canadian Condominium Institute – Eastern Ontario Chapter. 

With so many changes to the legislation governing condominiums happening in the coming months, the Canadian Condominium Institute is an instrumental player in engaging and educating the eastern Ontario condominium community. Congratulations to the newly constituted Board!

What Happens If Your Condominium Corporation Does Not Register With the CAO?

At the CCI-EO Annual General Meeting last night, the following question was asked: What happens if a condominium doesn’t register with the Condominium Authority of Ontario?  We realized this morning that the question was not answered, so we wanted to post a quick blog to answer the question.

As you know, the changes to the Condominium Act, 1998 have created the Condominium Authority of Ontario (“CAO”).  All condominium corporations in Ontario must register with the CAO and pay assessments by December 31, 2017. [Note: Check out our previous blogs for more information about the requirement to register and the proposed fees.  Also, please refer to the CAO website for additional information.]

If your condominium corporation does not register or registers, but does not pay its fees, there are two main consequences:

• The Registrar may make a compliance order against the condominium corporation [Notice of this Order must be given to Owners]; and

• The condominium corporation will not be capable of maintaining a proceeding before the Condominium Authority Tribunal or a proceeding in a court in Ontario except with leave of the Court.

These consequences are severe and can have a wide range of implications for condominium corporations.  For example:

• It could affect an insurer’s right to assert a subrogated claim;

• It can affect the marketability of the condominium corporation; and

• It can affect the condominium corporation’s ability to manage the affairs of the corporation.

In addition to the foregoing, condominium corporations must make additional filings with the Registrar including various returns.  If the condominium corporation is not registered, and thereby does not file its returns, it can be subject to late fees.

In our view, it makes the most practical sense to ensure you register.

In order to register, your condominium corporation needs a unique code.  If your condominium has not yet received a unique invitation code, contact the CAO at info@condoauthorityontario.ca.

Stay tuned to Condo Law News for more blogs about amendments to the Condominium Act and upcoming events .

Are There Any Exceptions to the Requirements in the New Condominium Act?

As many of our readers know, the new Condominium Act (the “Act”) amendments that are soon to be in effect will create new requirements and obligations for condominiums and their Boards. What our readers may not know is that the amendments also contain some exceptions to these new requirements and obligations.

In this blog, we provide an overview of a few of these exceptions.

  • Notices to be filed with the Condominium Authority

As outlined in an earlier blog, condominium corporations will be obligated to file certain “Returns” and notices with the Condominium Authority, and will in particular be required to notify the Authority of any changes to the membership of the Board.  However, a condominium corporation will not be required to file a notice of change where a director is re-elected immediately following a preceding term of office (see section 9.3(2) of the Condominium Act for this exception).

  • Information Certificates

Condominium corporations will be required to send out certain information certificates (including periodic information certificates, and new owner information certificate).  However, where certain conditions are met, including where 80% of owners have consented in writing to dispensing with the requirement to send such certificates, the condominium corporation may be exempt from this requirement (see section 60(5) of the Condominium Act for this exception).

  • Matters to be adjudicated by the Condominium Authority Tribunal

The Condominium Authority Tribunal will adjudicate most matters that it is requested to consider, except disputes involving:

  • Title to any real property (units or common areas)
  • Easements
  • Occupier’s liability
  • Condominium liens
  • Prohibited activities described in s. 117 of the act., or
  • The constitutionality of any provisions of the Act or Regulations (see generally sections 1.35 – 1.42 of the Condominium Act for these exceptions).

Davidson Houle Allen LLP would like to thank our Articling Student, David Lu, for his contribution in preparing this Blog.

Stay tuned to Condo Law News for other blogs about the amendments to the Condominium Act, and upcoming events.

Update on the Discipline Process under the CMSA

One of the more unsettling changes for condominium managers coming under the Condominium Management Services Act (“CMSA”) is obviously the complaint and discipline procedures. As we previously reported, under the CMSA anyone will be able to make a complaint to the Registrar of the Condominium Management Regulatory Authority (“CMRAO”) against a condominium manager for an alleged failure to comply with the proposed Code of Ethics. Sections 57 and 58 of the CMSA establish the following three levels of authority to deal with any such complaints:

1) CMRAO Registrar;

2) Discipline Committee; and

3) Appeals Committee.

Since the CMSA came out, we’ve known that under section 57 all complaints will go directly to the Registrar initially, who has very broad powers to deal with the complaint. Notably, if the Registrar is not able to resolve the complaint, the Registrar has the authority to refer the matter to the discipline committee.

Now that we have the proposed additional regulations under the CMSA, we have a much better understanding of the procedures for the discipline and appeals committees. If passed, here’s what the proposed regulations tell us about both the discipline committee and the appeals committee:

Composition and Appointments to the Discipline Committee and Appeal Committee

Composition: The CMRAO Board (or the Minister, if necessary) will appoint at least five members each to sit on the discipline committee and the appeals committee, at least one of whom has never been a licensee (i.e. a condominium manager).

Appointments: A person can sit on both the discipline and appeals committee at the same time. Each committee with have a chair appointed (and possibly vice-chairs). Once appointed, each committee member will be required to take, and sign, an oath. Appointments will be for three-year terms. However, the CMRAO Board can terminate the appointment of a committee member at any time for cause.

Procedures for the Discipline Committee

In our view, the discipline committee will be the second level of authority in the complaint process (the Registrar is essentially the first level of authority).

Limitation: The CMRAO Registrar must refer a complaint to the discipline committee within two years of receiving the compliant.

Purpose: The committee’s purpose is to hold a “semi court-like” hearing, that is open to the public, to review the complaint. In other words, the committee will likely follow a typical court hearing process, but may allow relaxed rules respecting evidence and testimony from witnesses. When a complaint is referred to the discipline committee, the chair will assign a three member panel (made up of two licensees and a non-licensee) to hear and determine the matter.

Parties: The CMRAO (and not the person who initially brought the complaint) appears to be the moving party, and the condominium manager (that is the subject of the complaint) would obviously be the responding party. The committee has the authority to add any other party to the proceeding, if necessary. Parties may represent themselves at the hearing or appoint legal counsel on their behalf.

Notice: Once a hearing date has been set to review the complaint, the committee must give the parties at least 45 days notice of the hearing date.

Evidence: If the CMRAO plans to tender evidence at the hearing, it must disclose the evidence to the parties 30 days before the hearing. Any other party (including the condominium manager), must disclose any evidence they plan to tender 15 days before the hearing.

Closed Hearing: If necessary, the committee can order that the evidence and submissions at the hearing be closed to the public.

Notice of Committee’s Decision: Once a decision has been made, the committee must send the final decision or order (including a notice of appeal rights) to the parties and to the person that made the complaint (even though the complainant may not be a party to the hearing).

Unless otherwise ordered, the decision must also be made public.

Procedures for the Appeals Committee

Again, in our view, the appeals committee will be the third level of authority in the complaint process, after the Registrar and the discipline committee.

Purpose: The purpose of the appeals committee is, obviously, to hear appeals from a decision of the discipline committee. The appeals committee will follow essentially the same process as the discipline committee with respect to disclosure of evidence and notice of a decision.

Limitation: If warranted, a party must appeal a decision from the discipline committee within 30 days of the discipline committee’s order.

Commencement of Appeal: To start the appeal process, the appellant must deliver to the appeals committee: 1) a Notice of Appeal (that sets out the parties to the appeal, the order being appealed, the grounds for the appeal, and the relief sought); and 2) the required filing fee (set by the CMRAO).

The appellant must also serve a copy of the Notice of Appeal to the discipline committee and the other parties to the appeal.

Parties: The parties to the appeal are, of course, the appellant, the other parties to the proceeding before the discipline committee, and any other person as added by the appeals committee.

Summary

The bottom line is that while the complaints and discipline procedures may appear intimidating or cumbersome, the process seems to be structured to permit the Registrar to handle (and dismiss or resolve) the majority of complaints that come in.  It appears structured such that only truly serious complaints, with due merit, will proceed past this first step.

Stay tuned to Condo Law News for more updates on the new legislation as it comes into force.

Tarion – Important Changes are Underway

On October 5, 2017, Ontario’s Minister of Government and Consumer Services (the Honourable Tracy McCharles) introduced the Strengthening Protection for Ontario Consumers Act, 2017.

If passed, this new legislation would bring dramatic changes to the new home warranty process in Ontario, following on the heels of Justice Douglas Cunningham’s comprehensive review of Tarion (the non-profit corporation that currently oversees new home warranties in Ontario).

The notice from the Ministry includes the following:

“The legislation (the Strengthening Protection for Ontario Consumers Act, 2017), if passed, would help strengthen consumer confidence in Ontario’s new home warranty program, promote properly built residential construction, and further enhance consumer protection. Proposed changes would: 

• Provide for two administrative authorities – one to administer the new home warranty program and one to regulate new home builders and vendors;

• Make the dispute resolution process easier for homeowners if they discover a problem in the construction of their new home;

• Strengthen the regulation of new home builders and vendors;

• Give government power to make rules and set standards; and

• Introduce modern oversight measures to improve accountability and transparency.

Should the bill pass, the ministry plans to consult with the public and other stakeholders during the regulation development phase on proposed regulations that would give effect to these legislative changes.”

We wholeheartedly support these proposed changes, which should greatly improve the warranty process for new home owners in Ontario. See our previous blogs respecting Justice Cunningham’s Review. And stay tuned for our further blogs on this topic, as we receive the draft new Regulations.

The Complaint Process under the CMSA

As we previously reported, section 57 of the Condominium Management Services Act (“CMSA”) establishes a complaint process under the new licensing regime. And now, the proposed regulations under the CMSA (circulated by the Ministry on August 30, 2017) provide further insight into the complaint process.

Here’s what we already knew about the complaint process under section 57 of the CMSA:

– Anyone can bring a complaint against a condominium manager, as long as the complaint is made to the Registrar appointed under the CMSA;

– Based on our interpretation, a complaint can be made against a condominium manager for:

– Any alleged violation of a condominium manager’s obligations under the CMSA; or

– Any alleged violation of the Code of Ethics.

– Once a complaint is received, the Registrar has the authority to investigate the complaint and can request information from any

– Licensees must respond to the Registrar’s request for information as soon as practicable.

– In responding to a complaint, the Registrar can choose from several options, including resolving the complaint themselves or referring the complaint to the discipline committee.

Now, with the proposed regulations under the CMSA, we have further insight into how the Registrar will investigate complaints, and the obligations that condominium managers will likely have in relation to such complaints. Here is what the proposed regulations appear to be telling us:

– The Registrar must give notice to specific individuals when making a request for information to investigate a complaint. Specifically, the Registrar must give notice as follows:

– If the request for information is made to a condominium management provider, the Registrar will send notice to the principal condominium manager of that firm; or

–  If the request for information is made to a condominium manager, the Registrar will also give notice to the principal condominium manager that employs the manager.

– If the Registrar takes any action against a licensee in response to a complaint, the Registrar will give notice of such action to:

– The licensee’s principal condominium manager, if the licensee is a condominium management provider;

– The licensee’s principal condominium manager and the licensee, if the licensee is employed by a condominium management provider; and

– The licensee and the condominium’s board of directors, if the licensee is a condominium manager employed directly by a condominium corporation.

– Further, a licensee cannot obstruct or interfere with any of the following:

– Someone making a complaint to the Registrar about a licensee;

– Providing information requested by the Registrar relating to the conduct of a licensee or a potential contravention of the CMSA or the CMSA’s regulations.

The intent of the regulations seems to be that if the Registrar requests information to investigate a complaint about a condominium manager, or the Registrar takes action against a condominium manager respecting a complaint, both the condominium manager and their employer (if applicable) will receive notice from Registrar.

Stay tuned to Condo Law News for more in our series of blogs coming shortly to give more details and comments about these proposed regulations. Next up will be our review of the discipline process.