Helpful Recent Decision About Condominium “Changes”

When a condominium corporation makes a “change” – which essentially is something that goes beyond maintenance and/or repair – involvement of the owners may be required under Section 97 of the Condominium Act.

But the required involvement of the owners (in relation to a change) also depends upon the estimated cost of the change.

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Important Court Decision About Recovering Costs From Owners

In the Wexler case, the owner brought a claim against the condominium corporation in Small Claims Court for total damages of $2,525.14 for alleged harassment, for recovery of costs for clean-up of pigeon droppings (charged to the owner by the corporation), and for recovery of costs for legal advice obtained by the owner.  After a three-day trial, the owner’s claims were dismissed.  That left the question of responsibility for the costs (of the Court proceeding).

The Small Claims Court ordered the owner to pay the condominium corporation’s legal costs – in the amount of $20,000.  This was based, at least in part, on the “indemnification” provision in the condominium corporation’s declaration.  Because of that indemnification provision, and also because the Small Claims Court felt that the owner had unnecessarily prolonged the trial, the Court held that the owner should be obligated to pay more than the usual costs ordered in a Small Claims Court matter.  [The Rules of Court state that the losing party is (usually) obligated to pay a maximum of 15% of the amount claimed, as costs to the winning party.]  But again, the Small Claims Court said that the owner was obligated to pay higher than usual costs in this case.

The decision of the Small Claims Court included the following:

I recognize that the plaintiff was not prepared for trial and that she was disorganized; this directly contributed to unnecessarily prolonging the trial. As such, and because her action was dismissed and because the condominium corporation has a Declaration, By-Laws and Rules providing for full indemnity, and especially because it would be unfair that the unit owners should bear all the costs of this litigation when the condominium corporation is unnecessarily sued, I allow costs in the amount of $20,000, inclusive of HST and disbursements. 

 The owner appealed and was successful on appeal.  On appeal, the Divisional Court said that the indemnification provision, in the condominium corporation’s declaration, did not apply.   Based on the wording of the indemnification provision, the Divisional Court said that the provision “is not applicable as there has been no loss, costs, damage, injury or liability suffered or incurred with respect to the common elements and/or all other units caused by an act or omission by Ms. Wexler”.

 I don’t disagree with the above reasoning of the Divisional Court.  But here’s my concern:

What will this mean for condominium corporations seeking to collect OTHER costs or OTHER expenses – quite apart from Court costs – and seeking to add those amounts to an owner’s common expenses when those costs or expenses have been caused by an act or omission of the owner or by an occupant of the owner’s unit?

 Many condominium declarations contain an indemnification provision similar to the provision considered by the Court in the Wexler case.  So, based on the Wexler decision, those provisions will only apply to losses, costs, damages, injuries, liability etc. suffered or incurred (and caused by an act or omission of the owner or an occupant of the unit) “with respect to the common elements and/or all other units”.

The problem is:  Some costs (caused by an owner or occupant) might not be covered.

And we know from other Court decisions (and from amendments to the Condominium Act) that these sorts of chargeback or indemnification provisions likely need to be in the declaration (in order to allow a condominium corporation to add such amounts to the owner’s common expenses).  [Such a provision in the by-laws or rules may not be sufficient.]

Here’s the bottom line:  Condominium corporations should consider amending their declarations to replace these imperfect, inadequate indemnification provisions – for the sake of all of the innocent owners in the condominium.

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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.

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Court Refuses to Order Medical Examination of Misbehaving Owner

A recent decision of the Ontario Superior Court shows that Courts can be reluctant to Order a medical examination of a misbehaving owner – unless there is some real evidence of a mental health issue.

In the case of Toronto Standard Condominium Corp. No. 2395 v Wong, the Ontario Superior Court found that the owner’s conduct was harassing, threatening, intimidating and abusive.  The Court said that her behavior contravened the Condominium Act and the corporation’s declaration and rules; and the Court ordered (pending the final hearing of the application) that the owner not have contact with any employee, manager, security personnel or board member of the condominium corporation, not come within 25 feet of the management office, and not disturb the comfort and enjoyment of the common elements.

The Court declined to order a medical examination of the owner (which had been a further request of the condominium corporation).  The Court said:

The material issues in the litigation before me relate to Ms. Wong’s abusive and threatening behaviour. There is nothing before me, beyond the fact of her behaviour itself, to suggest that Ms. Wong is not capable of understanding information that is relevant to making a decision in respect of the issues in the proceeding, or that she is unable to appreciate the reasonably foreseeable consequences of a decision or lack of decision in respect of an issue in the proceeding…. I have concluded that Ms. Wong’s behaviour on its own is not a sufficient evidentiary basis to make the invasive and rare order that she undergo a mental examination pursuant to s. 105(1) of the Courts of Justice Act.

Stay tuned to Condo Law News for more blogs about recent caselaw developments that are of interest to Condominiums.

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