Condo Law Digest – September 2017

Münster, LVM, Skulptur -Körper und Seele- -- 2016 -- 5920-6.jpg

White Snow and Sunshine Holdings Inc. v. Metropolitan Toronto Condominium Corporation No. 561, 2017 ONSC 4558
Decision Date: July 28, 2017
http://canlii.ca/t/h5bsj

The applicant owns the two commercial units in MTCC No. 561, a residential condominium. At present, the applicant’s employees are not allowed to use the condominium’s residential facilities (a swimming pool, a gym, squash court, etc.), although the applicant pays common expense fees. After unsuccessful negotiations with the Board, the applicant has brought this application to require that the corporation change its Declaration and allow his employees to use the recreational facilities.

Justice Lederer dismissed the application, drawing on Section 7(4) of the Condominium Act. He also noted a site specific by-law passed by the City of Toronto which required the developer of MTCC No. 561 to provide recreational space for the exclusive use of the residents of the building.

Comment: Costs of $11,000 were ordered payable by the Applicant.

Metropolitan Toronto Condominium Corporation 1067 v. 1388020 Ontario Corp., 2017 ONSC 4793
Decision Date: August 14, 2017
http://canlii.ca/t/h5c30

The defendant owns 8 condominium units and 3 parking spaces in MTCC No. 1067. This dispute is over the defendant’s unpaid common expense fees, interest charges, and additional expenses. The parties resolved most of their disagreements before appearing in front of the judge. The remaining issues were the rate of interest charge, additional claimed expenses, and legal costs. In particular, the defendant claimed that the rate of prime plus 30% specified in the corporation by-laws, was excessive.

Justice Ferguson allowed the interest rate to stand but disallowed the corporation from claiming additional “collection” expenses. He also awarded costs of $30,000 to the plaintiff.

Comment: Familiarize yourself with a condominium’s Declaration and By-laws before moving in so fees and interest charges don’t come as a surprise!

Brief Notices

The LSUC has found that a lawyer engaged in professional misconduct by breaching the trust requirements for deposits under the Condominium Act, accepting cash payments over $7500, making unauthorized withdrawals from trust, and allowing another lawyer (neither an employee nor a partner) to use his trust accounts. Read the full summary of the decision. The penalty is a 2-month suspension, 6-months of financial reporting, and a spot audit requirement.

An appeal has been denied in Cheung v. York Region Condominium Corporation No. 759. (I summarized this parking dispute in the Mid-summer 2016 post.)

 

About the Image: Sculpture “Body and Soul” (Duk-Kyu Ryang, 2015) in front of the office building of the LVM, Münster, North Rhine-Westphalia, Germany, by Dietmar RabichSelf-photographed, CC BY-SA 4.0, Link

Condo Law Digest – Mid-summer 2017

Keep out of Romanée-Conti.jpg

YCC No. 41 v Schneider, 2017 ONSC 3709
Decision Date: June 15, 2017
http://canlii.ca/t/h4bh6

This conflict arises from an insect infestation. In October 2015 Justice Diamond ordered that the Schneiders permit YCC No. 41 and its agents to enter their unit no later than November 13 in order to conduct a “flush and vac” insecticide treatment. On October 28 the corporation sent the Schneiders a letter advising them that Orkin (the pest control company) would come on Nov 13 to prepare the unit, and that the treatment would take place on Nov 16. The letter included an “Orkin Preparation Sheet” which said that the occupants (and not Orkin) were required to prepare the unit. It is not clear what exactly happened on November 13 when personnel from Orkin, together with staff from YCC No. 41 showed up at the Schneiders’ door. The Schneiders may or may not have prepared the unit themselves, and they may or may not have refused entry.

In this application, YCC No. 41 sought an order that the Schneiders had breached Justice Diamond’s order of October 2015. (In the original application, they also sought an order requiring the Schneiders to vacate and sell their unit, but later gave up this request.) After a 1-day trial, Justice Diamond dismissed YCC No. 41’s request for an order, citing the confusion created by the contradiction between the letter (stating that Orkin would prepare the unit) and the Preparation Sheet (stating that the occupants should prepare the unit.) He suggested that each party bear their own costs.

Comment: Litigation (complicated by poor communication) is a rather blunt means for gaining cooperation. One can only hope that the unit was treated sometime before the June 2017 trial.

Louiseize v Peel Condominium Corporation No. 103, 2017 ONSC 4031
Decision Date: June 29, 2017
http://canlii.ca/t/h4kd9

This is a dismissal of an appeal to an arbitrator’s award. Mr. Louiseize purchased three units in PCC No. 103 between 2001 and 2004 and has been renting them to non-related tenants for as long as he has owned them. The condominium’s Declaration specifies that units are to be used as single-family dwellings only. However the condominium took no real action to enforce the declaration until October 2013. At the November 2016 arbitration, PCC No. 103 asked for an order requiring immediate compliance with the single family restriction. Mr. Louiseize asked for the right to continue renting to unrelated tenants for a period equal to half the time he had owned the units, or failing that, compensation of $600/month per unit for lost income for the same period of time. ($600/month is apparently the difference between the expected rent for a single family and the amount that unrelated tenants could be charged. Is anyone else reminded of that old joke about the man who killed his parents, then threw himself on the mercy of the court on the grounds he was an orphan?)

The arbitrator gave Mr. Louiseize until August 2017 to comply with the single family restriction and awarded PCC No. 103 costs of $30,000. In the appeal, Mr. Louiseize asked for 75 months to change the use of two of his units, and that each party bear their own costs and share the costs of the arbitration. Justice Gordon heard the appeal but dismissed it, saying that the arbitrator had made no errors in law or principle, and awarded PCC No. 103 costs of $8200 for the appeal.

Comment: With the popularity of AirBnB, I suspect we’ll see more corporations cracking down on the single family provisions in their declarations.

Following-up

A costs award has been issued for Heyde v. Theberge Developments Limited, which was a motion to certify a class action suit. Justice Smith awarded costs of $56,000 to Heyde, despite the fact that they were only partially successful. The defendant had asked each party to bear their own costs.

I summarized CIBC Mortgages Inc. v. York Condominium Corporation No. 385 in November 2016, and wrote about the costs decision in January 2017. At the end of June the Ontario Court of Appeal dismissed appeals of both the original decision and the costs award.

About the Image: By Tomas erOwn work, CC BY-SA 3.0, Link

Condo Law Digest – June 2017

Airstream Trailer (1333647988).jpg

Bomba-Bibi v. Brookfield Condominium Services Ltd., 2017 HRTO 513
Decision Date: May 8, 2017
http://canlii.ca/t/h3q1b

Ms. Bomba-Bibi is an owner of a condominium unit in a building managed by Brookfield. In November 2015 and then in December 2015 she received letters from the corporation and its lawyer asking her to move a trailer from her parking spot. In February 2016 she received a follow-up letter, asking her to pay the lawyer’s fees or face a notice of lien if she did not. She eventually moved the trailer but did not pay the lawyer’s fees and did not receive a notice of lien.

Ms. Bomba-Bibi charges that she was not allowed to leave the trailer in her parking space because of her race, and that other residents were permitted to leave various items in their parking spaces. Brookfield and the corporation denied any discrimination and stated that other residents had also been asked to move items from their parking spots. The HRTO adjudicator dismissed the application as having no reasonable chance of success, given that Ms. Bomba-Bibi had no evidence that the alleged unfair treatment was due to her race.

Comment: Corporations and management companies must be consistent when enforcing condominium rules. The perception of selective enforcement often contributes to conflict.

Yeung v Chan, 2017 ONSC 3138
Decision Date: May 19, 2017
http://canlii.ca/t/h3vh5

This is a successful appeal of a Small Claims Court decision. Ms Chan purchased a unit in a newly constructed condominium with a closing date in January 2012. Before the closing date, she decided to “flip” the property. The respondents (Ms Yeung and Mr. Ho) agreed to buy it and put down a deposit of $15,000. The sale unraveled. Someone (not clear who) drafted a mutual release after the failed closing. The document covers how the deposit is to be divided and includes a clause that the realtor will abandon any claim for commissions.

Ms Yeung and Mr. Ho sued Ms Chan in Small Claims Court for the return of their deposit; Ms Chan counter-sued for $25,000. The original claim and the appeal hinge on whether the mutual release was a legally binding document. Deputy Judge Fisher ruled that it was, and the appeal judge disagreed. The release was never signed by the realtor, sections of it are crossed out and written over (not clear when or by whom), and it seems to have been executed on May 2, 2012, despite stating that it was “irrevocable” on two different dates in January 2012. Ms Chan did not testify at the original trial, and the trial judge accepted the testimony of her husband regarding his intentions for the release, despite the fact that he was not a party to the transaction. He awarded $7500 to Ms Yeung and Mr. Ho.

In the appeal Justice Boswell ruled in favour of Ms Chan, finding that the trial judge erred in concluding that the release was binding and enforceable. In his final reckoning he took into account Ms Chan’s profits from the rental of her unit (which she would not have enjoyed had she sold her unit to the respondents) and awarded her nearly $11,000.

Comment: On the eve of the original trial, Ms Yeung and Mr. Ho offered to “walk away,” meaning that Ms Chan would have retained the entire $15,000 deposit. So although the appeal was successful, Ms Chan is left with less money than she would have, had she accepted their offer.

About the Image: By dave_7 from Lethbridge, Canada – Airstream Trailer, CC BY-SA 2.0, Link

How to Survive a Business Partnership with your Spouse

Strix nebulosa couple.jpgI know Steven Petroff of IQ Partners as one of the city’s top recruiters. I recently found out that Steve and his wife Sara were the team behind the Petroff Gallery until they sold it in 2012. How did they manage to sustain both a happy marriage and a profitable business partnership for over 19 years, all the while raising two sons?

I had to find out more so I asked Steven to tell me how he and his wife did it. Here is what I learned:

Steven and Sara were able to be an effective team because they had different skills and each played to their strengths. Steven looked after finance, operations, and HR, giving Sara the freedom to develop her creative vision. She handled everything related to art – developing relationships with artists, selecting pieces and designing displays.

Steven and Sara trusted each other and supported each other’s decisions. On paper they were 50/50 partners. In practice, Steve deferred to Sara’s judgment on questions of art and Sara let Steven take care of business operations. Sure – there were times when each disagreed with something the other had done. No two business partners, however close, are always going to agree about everything. And we all make decisions that we later think the better of. But Steve and Sara respected each other, and they didn’t let small disagreements undermine their working relationship.

Because of their mutual respect, Steve and Sara were able to  learn from one another. Steven gained a greater appreciation of art and design. Sara became a more savvy business person.

Steve thoroughly enjoyed the years he and Sara spent running the gallery. But there are disadvantages to being in a business partnership with your spouse. For one thing, it means that the entire household income is coming from a single source. That can be stressful if the business suffers a downturn.

It is also much harder to “leave stuff at the office.” Any tensions in the business – due to suppliers, customers, staff – would invade their time away from the business. Many business owners report that it is hard to get away from work. It is that much harder when you’re working with someone with whom you share a home and a family. Steven told me that it could be “overwhelming” at times. He also told me that he knows of some couples in business together who protect their private time by setting rules about when it is OK to talk about business. While he and Sara never did this, Steven said that he could see why it might be a good idea for some.

Finally, I asked Steven if he had any advice for other couples in business partnerships. He said: Think it through carefully. He and Sara had a great experience, but the intensity of a business partnership combined with a marriage and co-parenting isn’t for everyone.

(You can find more resources for business partnerships at businesspartnershipsuccess.ca Check out my previous posts: Can This Partnership be Saved? (Part 1, Part 2, Part 3) and Breaking up a Business Partnership Doesn’t Have to be a Trial.)

About the image: Two Great Grey Owls. No machine-readable author provided. Magalhães assumed (based on copyright claims). – No machine-readable source provided. Own work assumed (based on copyright claims)., Public Domain, Link

Condo Law Digest – May 2017

Manzanillo strand.jpgMcNairn v Murphy and Pene 2017 ONSC 1678
Decision Date: April 6, 2017
http://canlii.ca/t/h32j6

McNairn is a Canadian lawyer who purchased a condominium in Costa Rica in April 2014. At the time of purchase, the property management company was under investigation for fraud. In September 2014 McNairn was elected President of the Home Owners Association and a new property management company was engaged. In early 2015 the new property manager contacted McNairn because he had been verbally abused by one of the condominium ownersand felt threatened; he resigned. McNairn was discouraged by these events and announced his resignation to the other owners via email in June 2015.

In response, Shannon Murphy, one of the defendants, sent a note (through the magic of the “reply all” option) to the other owners  in which she said that the “President quit after accusations of theft.” McNairn received the email and wrote to Murphy, explaining the situation and inviting her to get in touch. He later asked her to retract her statement and apologize. In response, Murphy cut and pasted McNairn’s email to her and made a half-hearted apology. Upon receiving this communication, Pene (another owner, also a lawyer) sent a message to the group, accusing McNairn of threatening and bullying Murphy, of violating professional ethics, and of failing to be honest in his dealings with the other owners. These allegations caused McNairn considerable stress and anxiety, as well as professional embarrassment. After a failed attempt to resolve things with Murphy and Pene, McNairn commenced litigation. Neither Defendant filed a defense and both have been noted in default.

Justice Beaudoin found in favor of McNairn and awarded him damages of $70,000 against Murphy and $90,000 against Pene, plus costs.

Comment: A little sad that conflict occurs among condominium owners even under the sunny skies of Costa Rica.

York Condominium Corp No 163 v Robinson
Decision Date: April 19, 2017
http://canlii.ca/t/h387b

The respondent is an owner and resident of YCC No. 163 who frequently communicates with the building staff regarding maintenance and governance issues. Unfortunately, her manner of communication is extremely disrespectful to the point of being verbally abusive (“insult, body shaming, name calling, and other forms of coarse language and rudeness”). In previous years she would communicate in person; more recently these communications have come in the form of virtually daily emails. The respondent has a right to complain and some of her complaints are valid. However the condominium is also a workplace and the position of YCC 163 is that the office staff should not have to put up with what amounts to daily harassment.

Justice Morgan agreed and ordered that Ms Robinson shall refrain from abusing, harassing, threatening, or intimidating any employee or representative of YCC 163. He also ordered that she pay costs of $15,000.

Comment: Download my article on the Condominium as Workplace that appeared in Condo Business.

About the image: Manzanillo Beach, Costa Rica. By Haakon S. Krohn – Own work, CC BY-SA 3.0, Link

Condo Law Digest – April 2017

Campfire 4213.jpgHeyde v Theberge Developments Limited, 2017 ONSC 1574
Decision Date: March 9, 2017
http://canlii.ca/t/h1t67

In Ontario, a Class Action suit must be “certified” by a judge before it can proceed. In this ruling Justice R. Smith has allowed a Class Action suit by owners in the Alta Vista Ridge Development in Ottawa. The plaintiff alleges that the defendant Theberge did not include a heating system in accordance with the specifications in the Disclosure Statement. Each unit purchased before Feb 2015 was supposed to include a forced air heating system. It turned out that the heating system was not included with the unit but was a rental. The plaintiff also proposes a sub-class whose Agreement of Purchase and Sale included a basement storage unit, which was not provided by the defendant. The plaintiff argues that this breach also gives rise to claims of negligent and fraudulent misrepresentation, breach of contract, and failure to act in good faith, among other breaches.

Theberge opposed certification of the class action, arguing that there is no identifiable class, no common issues, and that a Class Proceeding would not be the preferable procedure. Justice Smith disagreed, saying that it was not “plain and obvious” that the plaintiff would be unsuccessful. However he declined to allow any personal claims against Joey Theberge, saying that the plaintiff’s Statement of Claim did not provide any material facts in support of the allegations against him personally.

Law Society of Upper Canada v. Cho, 2017 ONLSTH 48
Decision Date: March 8, 2017
http://canlii.ca/t/h1r1f

Deposits for new condominiums must be held in trust. Meerai Cho, a lawyer, held funds in trust for Centrium between 2010-2013. During this period, she took funds from the trust account and sent them to Joseph Lee, the developer, who promised to pay it back later. Instead he stole the money and fled the country. Over 140 condominium purchasers lost a total of 13 million dollars. Ms Cho is now in jail, having pled guilty to the offense of breach of trust. This LSUC Tribunal found that she engaged in professional misconduct and ordered the most serious penalty, that her license be revoked. Ms Cho had asked for the second most serious penalty (permission to surrender her license rather than have it revoked).

Comment: In the words of D. Wright, panel chair: “A transgression as serious as this – no matter what the person’s record, remorse, or standing in the community – generally leads to revocation of one’s license.”

About the image: By Dirk BeyerOwn work, CC BY-SA 3.0, Link

Condo Law Digest – March 2017

Caterpillar 345B excavator & 740 dumper, 29 January 2009.jpgNiagara North Condominium Corporation No. 6 v Temideo, 2017 ONSC 897
Decision Date: February 7, 2017
http://canlii.ca/t/gxch8

The defendant owns a condominium in NNCC No. 6 that is rented to Kimberly Watson and her adult son Robert James. James, the grandson of the defendant, suffers from health issues which make it impossible for him to live on his own. In the spring of 2013 the unit below the defendant’s was rented to a new tenant. Both the new tenant and Ms. Watson complained to the property manager about excessive noise coming from the other’s unit. In this action NNCC No. 6 seeks an order that Ms. Watson move out of the unit or refrain from making excessive noise.

Based on the evidence provided to him, Justice Taylor found that Ms. Watson made excessive noise in the unit from fall 2013 to 2015. Since then there have been no further noise complaints against her. Justice Taylor declined to evict Ms. Watson and her son as such “draconian” remedies should be reserved for when there is an ongoing refusal to comply with rules. Justice Taylor let stand a lien of  $1714 in legal costs against the defendant’s unit.

Comment: Justice Taylor limited the costs of the application to a modest $2500, saying that, “a less heavy-handed approach might very well have avoided an application to the court.”

Otomic Contractors Ltd. v Royal 7 Developments Ltd., 2017 ONSC 1001
Decision Date: February 10, 2017
http://canlii.ca/t/gxj76

The plaintiff, an excavating contractor, was hired to work on Phase 1 of  a construction project being developed by the defendant. The parties’ contract contemplated that Otomic might continue to work on Phase II, but nothing was formalized. Things started out well. Otomic completed the work on Phase I and started on Phase II. After a number of months the relationship broke down and Royal 7 delayed payment of Otomic’s invoices or paid only portions of them. At some point the parties may have held a meeting to discuss their differences, although what was said at the meeting, who attended, and even whether a meeting took place, is in dispute. In this action Otomic claims that it is owed about $218,000 for work completed and seeks a declaration that it is entitled to a construction lien. Royal 7 has counterclaimed for about $274,000 on the grounds that it had to retain another contractor to finish the job that Otomic should have done, and that Otomic over-charged them for work completed.

Justice Mulligan found in favour of Otomic, saying that Royal 7 could not hold them responsible for the cost of continuing the excavation work on Phase II. He rejected the counter-claim as there was no evidence that Otomic over-charged Royal 7. He allowed Otomic’s lien and encouraged the parties to settle the issue of costs themselves.

Vitz Holdings  Inc. v. Toronto Standard Condominium Co. No. 1530, 2017 ONSC  1173
Decision Date: February 14, 2017
http://canlii.ca/t/gxlwr

The applicant owns a commercial unit in TSCC No. 1529 where he proposes to set up a dentist’s office. The construction of the office would require boring through the floor/ceiling of TSCC 1530 to install plumbing, power lines, insulation, etc. TSCC 1530 has granted an Easement to the owners of TSCC 1529 to install various utilities. TSCC 1530’s consulting engineer has approved the plans and suggested some changes, which the applicant has accepted.

The applicant also owns 4 parking spaces at TSCC 1530, and on this basis TSCC 1530 argues that the applicant is an “owner” of TSCC 1530 should comply with Section 98 of the Condominium Act. This would mean that the applicant must get the approval of the Board to make his alterations. TSCC 1530 also takes the positions that the applicant is not a beneficiary of the Easement, and that under a Shared Facilities Agreement he needs the consent of TSCC 1530 to make any “major change.”

Justice Penny found that it was simply “fortuitous” that the applicant owned parking units in TSCC 1530; he is entitled to the Easement; he does not have to comply with Section 98; and the proposed work is not a “major change.” The judge also granted costs of $9000 to the applicant.

Comment: I have no idea (and the written record gives no clue) as to why TSCC 1530 took the position that it did.

About the image: By bilbobagweedLoading, CC BY 2.0, Link

Condo Law Digest – February 2017

Mental health in the past

Toronto Standard Condominium Corporation No. 2395 v Wong, 2016 ONSC 8000
Decision Date: December 12, 2016
http://canlii.ca/t/gwn72

Ms. Wong owns a unit in TSCC 2395. In November 2016 she began a pattern of erratic and threatening behaviour, most of it targeted at a member of the condominium’s staff. Ms. Wong’s behaviour was sufficiently concerning that measures had to be taken to ensure the staff member’s safety. In this application TSCC 2395 asks for an injunction and compliance order prohibiting Ms. Wong from 1) contacting or coming within 25 feet of the management office or TSCC 2395 personnel; 2) disturbing the comfort and quiet enjoyment of the common elements. They also asked the judge to find that Ms. Wong’s behaviour amounted to workplace harassment and that she has breached the Condominium Act. In addition, they asked the judge to consider an order that Ms. Wong undergo an examination by a mental health practitioner for an opinion on whether she has a disability, such that the court should order the appointment of a litigation guardian.

Justice Akbarali agreed to grant the compliance order and the other relief. However she declined to order Ms. Wong to be examined by a mental health practitioner. She reasoned that Ms. Wong’s behaviour in itself was not a “sufficient evidentiary basis” to make the “invasive and rare order” that she undergo a mental examination. Justice Akbarali granted costs of about $16,500 to TSCC 2395.

Comment: A difficult case for all involved. For more on the condominium as a workplace, see my article in Condo Business.

About the image: An itinerant surgeon extracting stones from a man’s head. Pencil drawing by P. Quast. http://wellcomeimages.org/indexplus/obf_images/e0/40/a7ff774fee31eba68411e4295f34.jpg Gallery: http://wellcomeimages.org/indexplus/image/V0016245.html, CC BY 4.0, Link

 

Condo Law Digest – January 2017

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CIBC Mortgages Inc. v York Condominium Corporation No. 385, 2016 ONSC 8036
Decision Date: December 21, 2016
http://canlii.ca/t/gwkxb

This is a decision on costs in a case I covered last month. The dispute was over whether the mortgagee or the condominium corporation should receive the proceeds from the forced sale of a unit. The amount at issue was about $100,000.

Justice Dunphy began by chiding the parties for their “excessive zeal” in disregarding the limitations he had imposed on submissions. CIBC Mortgages asked for costs of about $70,500 while YCC 385 requested that the costs award be limited to a nominal amount.

The judge awarded CIBC Mortgages costs in the amount of about $62,500. His main consideration in making this award was that CIBC Mortgages had made two previous offers to settle for about half the proceeds from the sale. He reduced the costs requested by $8000 to reflect that excessive time and energy were spent in cross-examinations and examinations of witnesses, which ended up having little use at trial. Justice Dunphy rejected YCC 385’s arguments that “innocent” unit owners should not have to foot the bill. As he said, “The unit holders elect their managers and the conduct of litigation by management is ultimately their responsibility.”

Comment: It is worth repeating the judge’s remark that, “proportionality and reasonableness ought ever to be the lodestar held in view when conducting litigation.”

2308478 ONTARIO INC. v YRCC NO. 715, 2016 ONSC 6256
Decision Date: December 9, 2016
http://canlii.ca/t/gw0p6

YRCC 715 is an industrial-retail building and the applicant, Steven Torok, owns and operates a business in one of the units. In December 2014 he issued a claim against the Corporation and five directors for property damage, loss of profit, business interruption and breach of contract. In this action of April 2016 he seeks an order appointing an Administrator to manage the Corporation, saying that the current Board of Directors has not acted in the best interest of the corporation. In particular, they had not maintained an adequate reserve fund, had neglected to do maintenance, and had not addressed some parking issues.

While the Board spent almost no money on repairs or maintenance from 2012-14, they engaged a new property management company in Fall 2013, did significant roof repairs in 2014-15, and retained Ontario Parking Authority to tag illegally parked vehicles. Justice Dow agreed with Mr. Torok that it was his 2014 application to the court that prodded the Corporation to fulfill their responsibilities. However, given that self-governance is the norm and the appointment of an Administrator is supposed to be an exception, the judge dismissed the application.

Comment: In an unusual move, Justice Dow awarded costs of $2500 to Mr. Torok, although his application was unsuccessful.

Bastien v Egalite, Collings, Langlois, Bliss and Chinkiwsky 2016 ONSC 7652
Decision Date: December 2, 2016
http://canlii.ca/t/gvxvp

The plaintiffs purchased a condominium unit with the assistance of Mr. Egalite, a real estate lawyer. When the sale closed on January 3, 2014, the plaintiffs found extensive water damage in the unit due to a burst pipe and advised the vendors that they wanted to rescind (cancel) the purchase. The vendors refused and offered either a monetary settlement or to carry out the required repairs.  Mr. Egalite attempted to negotiate a rescission of the purchase but was unsuccessful. In February 2014 the plaintiffs retained Mr. Collings, a litigation lawyer, to make claims against the vendors, Mr. Egalite, and an insurance company. The plaintiffs failed to pay Mr. Collings’ invoices and so he withdrew. In July 2014 the plaintiffs retained another lawyer, Mr. Langlois, to assist them. When the plaintiffs did not give him further instructions, Mr. Langlois returned to them the unspent portion of their $1000 retainer and closed the file.

The plaintiffs allege that all three lawyers were negligent because they failed to take steps to rescind the condominium purchase. They have claimed $700,000 against Mr. Egalite, $500,000 against Mr. Collings and $300,000 against Mr. Langlois. These three defendants brought a motion to dismiss the action on the grounds that the claim has no chance of success. They argue that the plaintiffs have not offered any facts to support their allegations, and that they have not suffered any damages because of the defendants’ action or inaction. Justice R. Smith agreed and dismissed the action as frivolous and vexatious.

Comment: In his ruling Justice Smith provides an interesting discussion of the legal principles involved in dismissing an action as frivolous or an abuse of process.

About the image: Conductor’s bag with money changer. No machine-readable author provided. LosHawlos assumed (based on copyright claims). – No machine-readable source provided. Own work assumed (based on copyright claims)., CC BY-SA 3.0, Link

Condo Law Digest – December 2016

Czech-2013-Prague-Astronomical clock face.jpg

CIBC Mortgages Inc. v York Condominium Corporation No. 385, 2016 ONSC 7343
Decision Date: November 24, 2016
http://canlii.ca/t/gvsn5

This is a dispute between a bank and a Condominium Corporation over the proceeds from the sale of a unit in YCC 385. The Corporation was put under a court-ordered administrator in November 2010. In March 2011 the Corporation changed counsel and in May 2011 the administrator changed property management companies. (I mention these changes because they help explain the confusions that followed.)

The unit in question had been owned by Frank Blowes. In February 2011 a judge issued a number of restraining orders against Mr. Blowes and ordered him to pay YCC 385’s costs of $15,000 within 30 days. In March 2011 the amount that YCC 385 paid to counsel  regarding the dispute with Mr. Blowes were entered into its general ledger, rather than charged against Mr. Blowes’ unit. In August 2011 (new) counsel for YCC 385 uncovered the error and sent a demand letter to Mr. Blowes for $44,474 ($15,000 in court-ordered costs and another $29,272 in other costs recoverable as common expenses). Mr. Blowes did not pay, and a lien was registered on his property in December 2011 and served upon CIBC as the mortgagee of the unit. Mr. Blowes went to court twice (Dec 2012 and May 2013) in attempts to stop the proceedings. He was unsuccessful each time and costs were awarded against him. (It appears that he did not have legal counsel.) YCC 385 received possession of the unit from the Sheriff in November 2013 and agreed to a sale of the unit for $110,000 in April 2014. Meanwhile, over at CIBC, the documents related to the lien and the sale of the unit had been overlooked somehow. CIBC learned about the planned sale of the unit days before it was to occur. YCC 385 and CIBC agreed that the funds from the sale should be placed in trust pending determination of priority.

Justice Dunphy found in favour of CIBC. He reasoned that, if the default occurred earlier than three months before December 2011, then the proceeds of the sale should go to CIBC as the mortgagee. If the default occurred within three months of December 2011, then YCC 385 should retain the funds. Payment of the court-ordered costs (the original $15,000) was due in March 2011, meaning that a lien should have been registered in June. YCC 385 failed to register the lien on time, and so they had no right to revive it in  December.

Comment: This case underscores the need for timely and professional accounting services.

Peel Standard Condominium Corporation No. 837 v Davies Smith Developments Inc., 2016 ONSC 4947
Decision Date: October 27, 2016
http://canlii.ca/t/gvcms

This dispute is about deficiencies in the construction and installation of the HVAC system at PSCC 837. The Corporation claims damages of $500,000 against the vendor and developer of the Corporation; they in turn have counter-sued third parties (the suppliers and installers of the HVAC system). In this action, the defendants and the third parties move for summary judgment to dismiss, on the grounds that PSCC 837 waited too long to bring the claim.

PSCC 837 obtained engineering reports in November 2011 and March 2012, both citing “poor soldering connections” as the cause of water leaks. In February 2013 they commissioned a third report (delivered nine months later) which determined that the localized failures were the result of a systematic construction deficiency. PSCC 837 argues that it needed this report before it could file a claim for damages. The moving parties maintain that a claim could have been filed on the basis of the earlier reports.

Justice Pollak dismissed the claim for summary judgment, saying that neither side had provided enough evidence as to when PSCC 837 knew or should have known about the construction deficiencies.

About the image: The astronomical clock in Prague’s Old Town Square – the oldest such functioning clock in the world. Photograph by Godot13Own work, CC BY-SA 3.0, Link