Privacy in Condominiums

Some special considerations apply to privacy issues in the condominium setting.

The basic concept in law is that privacy rights apply whenever there is a “reasonable expectation of privacy”. Recently, the Ontario Court of Appeal has recognized a tort of “intrusion upon seclusion”, which is essentially the tort of violation of privacy rights (see Jones v. Tsige, 2012 ONCA 32).

So privacy rights are now clearly recognized by our courts, but how do these rights apply in a condominium setting? The key question is: what are an owner’s reasonable expectations of privacy?

The answer will depend to a certain extent on the nature of the condominium community (highrise, townhomes, etc.), as well as the condominium’s governing documents (including the Condominium Act, and the corporation’s Declaration, Description, By-laws and Rules). In other words, an owner’s privacy rights may vary from condominium to condominium.

In each case however, condominium owners and residents will have certain rights of privacy in relation to:

  • their personal information;
  • their personal property;
  • the use and enjoyment of their unit; and
  • the use and enjoyment of the common elements.

But the key is that there will be limits on these privacy rights because of the sharing and co-operation that comes with condominium living. For instance:

a. Rights of Entry: Condominium corporations have general rights to enter the units and exclusive-use common elements, on reasonable notice, in order to perform the corporation’s objects and duties. So condominium owners and residents do not have complete privacy in their homes.

b. Surveillance: Condominium corporations have rights to arrange for surveillance of the common elements, again in order to perform the corporation’s objects and duties. Note however that, subject to some exceptions, the surveillance must be disclosed (to persons attending on the property) and must be confined to locations where there is no reasonable expectation of privacy.

c. Records: As part of their record-keeping responsibilities, condominium corporations collect personal information related to owners and occupants. All condominium owners have rights to inspect the records of the corporation. However, these inspection rights do not apply to certain types of records, including records relating specifically to other owners or to other units. Still, this right of privacy in relation to an owner’s “personal records” may become blurred if the personal information is part of a record that has general or common application to all owners or to the corporation as a whole.

Small Claims Court Dismisses Claim for Disclosure of Draft Minutes

A unit owner recently brought a condominium corporation to court for the alleged failure of the corporation to disclose records of the corporation pursuant to section 55 of the Condominium Act in Stewart v. Toronto Standard Condominium Corporation No. 1591. In particular, the owner claimed (under section 55) for the following:

  • Production of the minute-taker’s personal notes from the corporation’s AGM;
  • That the AGM minutes were inaccurate and the minute-taker’s draft minutes had been improperly revised by the Board;
  • A penalty of $500.

After a full trial on the matter, the claim was dismissed by the Court. The Court said that “the notes of the note-taker are a work-product and not a record” for the purposes of Section 55. The Court also said that the term “records” does not include “drafts, work in progress, rough copies, et cetera”.

The Court also said that the Board’s minor adjustments to the draft minutes were not improper. The Court added the following; “the minutes are intended to be an accurate summary of the events that took place not a verbatim transcript.”

This case confirms that documents that are considered to be in draft form, or that are otherwise a “work in progress”, do not constitute “records” of the Corporation within the meaning of section 55 of the Act. This would appear to suggest that only once a document is in “final” form does it constitute a “record” of the Corporation. This being said, in our view, it is nonetheless possible that some types of “draft” documents (such as draft reserve fund studies) might be considered to be records of the Corporation. This however, would depend upon the situation.

The Court in this case also took issue with the fact that, “it also became evident that being critical and looking for ways to find the board to be negligent has become a sport for (the owner)”. The Court said that the plaintiff’s requests amounted, in this case, to a “pure fishing expedition, without evidence to support his suspicion of impropriety by the members of the board of revising, to their benefit, the minutes that were taken at the annual general meeting held on June 22nd, 2011”.

The Court awarded costs to the condominium corporation that were higher than the normal costs permitted in Small Claims Court. The Court took particular issue with the plaintiff’s behavior and conduct towards the condominium corporation in the context of the claim and otherwise, and found the following:

“They have the luxury of time to do nothing but find ways to criticize the actions of the board. You know what, instead of criticizing I would have had more respect for the plaintiff if he had taken the initiative and perhaps had become a board member, or come up with solutions on how to better run the board than to stand on the sidelines and do nothing but criticize. So given that, I am going to use my discretion to impose a higher amount than is typically awarded because I do not want this behavior to continue… I think it does interfere with the functioning and the proper running of the board….”

The Court clearly decided to send a message to the plaintiff that further unfounded and unsupported allegations against the board would not be tolerated by the court.

Educating Condominium Directors

It becomes apparent when the regular insurance replacement cost valuation is completed that condominium complexes are multi million dollar assets. As well, quite often condominium budgets are in the many hundreds of thousands of dollars. Being a director of such an enterprise is not for the faint of heart.

Having said this, being a condominium director is a rewarding experience. Taking on this role however, without understanding what is involved, and what liability can occur is a mistake. A person who wishes to become, or has been elected as a director should have an understanding of the Condominium Act, 1998 (the “Act”), their own condominium documentation and best practices of how their condominium corporation should operate.

The easiest way to reach this threshold is through education. Becoming a member of the Canadian Condominium Institute (CCI) is one such avenue. Once you are a member of CCI, you will have access to many articles and newsletters written by both condominium professionals as well as condominium directors through the CCI website. As well, the CCI Ottawa Chapter offers a two-day weekend Directors course twice a year (November and April) at the Nepean Sportsplex. The course covers such topics as an Overview of the Act; Reserve Fund Studies; Insurance; Accounting; Management; and Enforcement. This is in addition to the programs offered by CCI Ottawa throughout the year. CCI Ottawa can be contacted at www.cci.ca/ottawa.

Majority Vote

Many condominium decisions can be made by the Board alone. But some decisions require owner involvement. When owner involvement is required, the Condominium Act indicates what sort of owner involvement is necessary.

For example, a by-law requires a particular kind of “majority vote”. Section 56(10) of the Act says that a by-law must be confirmed by a vote with the owners of a majority of all units voting in favour of the by-law.

But if the Condominium Act doesn’t say otherwise, when a decision requires owner involvement, an “ordinary vote” is required. This is governed by Section 53 of the Act, which states:

53. Unless otherwise provided in this Act, all questions proposed for the consideration of the owners at a meeting of owners shall be determined by a majority of the votes cast by owners present at the meeting in person or by proxy if there is a quorum at the meeting.

So, an “ordinary vote” is a majority of the votes cast, provided there is a quorum. As an example, suppose at a meeting of owners fifty units are represented either in person or by proxy and this is sufficient for a quorum. Suppose there is a motion requiring an ordinary vote (such as re-appointment of the auditor). Suppose the vote is called and the results are as follows: there are two votes in favour; there is one vote opposed; and all other voters (forty-seven) abstain from voting. Under this scenario, the motion is “carried”, two votes to one (ie. a majority of the votes cast).

James Katz joins Condominium Litigation Team

Nelligan O’Brien Payne’s Condominium Law Group is thrilled to welcome the newest member of our condominium litigation team: James Katz.

As a member of our condominium litigation team, James’ practice focuses on litigation in the condominium context, such as: building deficiency actions, applications for compliance with the Condominium Act, 1998, or the Corporation’s Declaration, By-Laws or Rules, first year budget shortfalls, private arbitrations related to breaches, and any other dispute which may, and can, arise in a condominium setting.

James is fluently bilingual and looks forward to assisting the condominium community in both official languages.

Click here to view James’ firm profile, and click here to view other members of our Condominium Law Group and condominium litigation team.

The Role of the Chair

A recent Court decision has confirmed the important role played by the Chair at a meeting of condominium owners.

In the case of Davis v. Peel Condominium Corporation No. 22 (June 7, 2013), a meeting of owners had been held to consider removal of the Board.  At the meeting, the Chair was required to consider whether or not certain proxy votes should be excluded pursuant to Section 49 of the Condominium Act on the grounds that the owners (who signed the proxies) were at least thirty days in arrears (and therefore were not entitled to vote at the meeting).

The Chair determined that the owners in question were not in arrears, and therefore accepted the proxy votes. The removal vote was held, and the Board was removed. One of the owners then applied to Court for an order declaring the vote invalid on the grounds that the Chair had improperly accepted certain proxy votes.

The Court said that the Chair had acted properly, and upheld the vote. The key aspects of the Court’s decision were as follows:

  • The Court confirmed that it is the role of the Chair, at least at first instance, to determine an owner’s right to vote.
  • The Court found that the Chair might have erred in relation to three of the proxy votes. In other words, the Court found that perhaps three proxy votes should have been excluded, but since the three votes did not in any event influence the result, the Court declined to overturn the vote.

Green Light Given for Mandatory Qualifications for Condo Managers

For those following the revisions to the Condominium Act: Tracy MacCharles, the Minister responsible for Consumer Services, announced last Thursday that the Ontario government has given the “green light” to bring in mandatory qualifications for condominium managers.

A group representing condominium owners, residents and industry experts will examine what these qualifications for condominium managers should be and is expected to report back to the Ministry in the summer of 2014. This same group will also determine how a self-funded, independent regulatory authority may be set up to oversee the qualifications.

The Ministry is seeking input from the public. You may share your thoughts on this issue with the Ministry by e-mail at oncondo@ontario.ca, mail or through Twitter (@ontarioconsumer/ #oncondo), or Facebook (facebook.com/ontarioconsumer).

Use of Reserve Fund Monies

Section 93(2) of the Condominium Act, 1998 states that a condominium corporation’s reserve fund can only be used for the purpose of major repair and replacement of the common elements and assets of the corporation. In light of this wording, we are often asked whether this means that only the strict repair costs (for example, the costs of contractors and engineers) can be funded from the reserve fund. We are also asked whether this means that only repairs and replacements that are listed in the reserve fund study can be funded by the reserve fund.

In our view, the wording of section 93(2) allows for the use of reserve fund monies for all costs related to major repairs and replacements. Such costs may include a variety of soft costs, which are incurred for the purpose of proceeding with a major repair and replacement.

In addition, reserve fund monies are not restricted to funding only those major repairs or replacements which are listed in the reserve fund study. In appropriate circumstances, reserve fund monies can properly be used to fund unexpected or unplanned expenses.

One note of caution: for any unplanned expenditure (not predicted by the reserve fund plan), remember to consider whether or not the unexpected depletion of the reserve fund could result in an increase in reserve fund contributions in the future (which might need to be disclosed in paragraph 12 of the status certificates).

Owners Share the Good and the Bad (Including Construction Liens)

Maintaining and repairing the common elements is one of the primary obligations of a condominium corporation. Condominium corporations generally retain independent contractors for this work. Unfortunately, a contractual relationship sometimes leads to a dispute. For example, the contractor may feel that the corporation is improperly holding back payment.

If such a dispute arises, one of the contractor’s collection powers is to register a lien against the property. A lien for common element work can be registered against all the condominium units. This is because all units have a shared interest in the common elements.

There are only a few court decisions that illustrate unit owners’ shared responsibility for the amount of a construction lien. One such decision is Associated Mechanical Trades Inc. v. Kurzbauer, a 2008 Ontario Superior Court decision. In this case, a condominium corporation hired a contractor to carry out work on the common elements. As a result of a contractual dispute, the contractor registered a lien against the condominium units.

Under the Construction Lien Act, in order to discharge the lien, the condominium corporation can pay into Court the amount of the lien as security, pending the Court’s decision on whether the contractor is entitled to that amount.

In Kurzbauer, the unit owner sought to pay her unit’s proportionate interest toward the security. The contractor required that the entire amount of the security be paid before the construction lien would be discharged against any individual unit. The owner brought a motion against the contractor.

The Court examined the following issue:

  • Can an individual unit owner pay his or her proportionate interest in the lien, and require the contractor to discharge the construction lien as against his or her unit only? 

The contractor argued that the entire security should be paid, because the owners have an “undivided interest” in the common elements, and therefore the security could also not be divided. 

The Court ultimately found in favour of the owner, relying on section 14 of the Condominium Act, 1998.  Pursuant to this section, a unit owner can discharge the portion of a lien that is registered against her unit (equivalent to the proportionate interest, not the proportionate contribution) of the unit, as set out in the Corporation’s Declaration.

The Court stated that if each unit owner paid the unit’s proportionate interest toward the security, then the lien claimant would be in no different position than if the lands were not registered as a condominium.

According to the Court, the contractor has “nothing to lose” by vacating the lien against one unit, where the unit owner pays for the unit’s share of the lien. Moreover, it is unreasonable to expect that a single owner can pay the full amount of the lien in a large condominium complex. 

I note that section 14 of the Act specifically applies to encumbrances that are registered prior to the Declaration of a condominium corporation.  The Court seems to suggest in the Kurzbauer decision that the “policy” underlying section 14 applies more generally, including to liens registered by contractors after declaration.

Of course, the condominium corporation may arrange to pay for the entire amount of the security, on behalf of the ownership.  If the lien is substantial, the Corporation may need to consider funding options such as: a special assessment, borrowing, or depleting the reserve fund.  The best approach will depend on the facts of each case.

If the corporation is ultimately successful in defending the contractor’s claim, the amount paid for the security would be returned to the Corporation.

Condominium Board Policies

The Condominium Act contains no reference to "Policies". So, can a condominium corporation establish "Policies" (as opposed to passing Rules or By-Laws)? If so, when does a Policy make sense?

In our view, the Board has the right to establish policies for matters falling within the mandate of the Board (i.e. matters that can be decided by the Board). A Policy (created by resolution of the Board) is essentially a "repeating decision" of the Board. In other words, a Policy expresses how the Board will decide a particular type of issue (if it arises more than once). Again, it's essentially a decision of the Board that will apply to similar situations in future – until the Board, or a future Board, changes the Policy.

A Policy is enforceable only to the extent that the particular Board decision is enforceable. So, a Policy (as opposed to a By-law or Rule) normally makes sense only in cases where the Board decision can be independently enforced.

Note that a condominium corporation may have a legal obligation to establish certain policies. Examples are as follows:

  • A Violence and Harassment Policy (under the Occupational Health and Safety Act), if the corporation has at least one employee;
  • A Customer Service Policy (under the Accessibility for Ontarians with Disability Act), if the corporation has at least one employee;
  • A Privacy Policy;
  • A Human Rights Policy.

But, again, the Board can also consider Policies for any repeating issues.

In a given case, the Board will need to consider:

  • Would a Policy make sense for this particular issue?
  • If so, should the Policy be provided to all owners, and also attached to all status certificates?
  • Would it be more appropriate to pass a By-law or Rule? (For instance, is a By-law or Rule needed in order to enforce the particular decision?)