Condo Law Digest – February 2018

Rosario under construction.jpgJones v. 2341464 Ontario Inc., 2018 ONSC 717
Decision Date: January 30, 2018
http://canlii.ca/t/hq4hm

In May 2013 the parties entered into an agreement of purchase and sale. The applicants were to purchase a pre-construction unit in a building on Niagara Street for $649,000. The occupancy date was to be on or before September 1, 2014. In May 2013 the occupancy date was moved to no later than February 1, 2015. Construction did not actually begin until May 2016. In February 2017 the applicants were advised of some changes to the layout of the condominium units, including the removal of balconies. The applicants decided to proceed with the purchase despite these changes. Later the same month the defendant contacted the respondents and advised them that, due to the delays and to costs they had incurred in the planning process, they would no longer honour the purchase and sale agreement. The new price (on which the applicants had “first right of refusal”) was to be $875,000.

Justice Favreau found the original agreement of purchase and sale to be valid and enforceable. He made an order of specific performance granting the applicants occupancy of their unit within 30 days, and also awarded them $20,000 in costs.

Comment: Justice Favreau said that it was “evident” that the respondents were reluctant to complete the sale so they could benefit from an increase in the value of real estate since the agreement was made.

Toronto Condominium Corp. 1462 v. Dangubic, 2018 ONSC 491
Decision Date: January 19, 2018
http://canlii.ca/t/hpvh1

Mr. Dangubic owns a unit in TSCC No. 1462. Justice Morgan describes him as “not a good neighbor,” as he has violated other residents’ rights of quiet enjoyment, has gotten into verbal conflicts with others, and has left obscene and aggressive voice messages. TSCC charges that he owes over $14,000 in common expenses; these consist mainly of the legal cost of compliance letters and of a lien, and costs of attempted collection of arrears. The main legal issue at stake is whether the lien registered by TSCC 1462 is valid.

Justice Morgan ruled that the lien was indeed valid, as Mr. Dangubic was aware of the claim against him, knew the circumstances of why and how fees were incurred, and the fees are reasonable for the legal work done. He granted TSCC 1462’s request for summary judgment and also granted them costs on a substantial indemnity basis of over $16,000.

Comment: Disruptive owners should understand that the legal cost of getting them to comply with the corporation’s rules will not be borne by the owners at large.

About the image: Building under construction in Rosario, Argentina, which like Toronto is experiencing a construction boom. CC BY-SA 2.5, Link

Condo Law Digest – January 2018

Déneigement westmount.jpg

C.M. Callow Inc. v. Tammy Zollinger et al., 2017 ONSC 7095
Decision Date: November 27, 2017
http://canlii.ca/t/hp00r

C.M. Callow Inc. is a property maintenance company that provided winter and summer maintenance at a condominium complex in Ottawa, managed by the Condominium Management Group (CMG). CMG terminated the two-year winter maintenance contract with Callow earlier than expected, while Ms. Zollinger was property manager. The issues in this trial were whether CMG was in breach of contract, and if so, what are Callow’s damages?

Callow’s position is that the CMG decided to terminate the winter maintenance contract in March 2013 but did not advise him until Sept 3013. Between March and September, while Callow was fulfilling the summer maintenance contract, Ms. Zollinger and certain board members falsely represented that the winter maintenance contract would be renewed or extended. During this time, Callow provided extra “freebie” services to enhance the property, as an incentive to CMG to renew the two-year contract.

CMG’s position is that Callow’s winter maintenance work did not meet their expectations, and that they were within their rights to terminate the contract with 10-days notice, and they did not falsely represent nor act in bad faith.

This case hinged primarily on two things: the evidence (including emails exchanged among board members and the parties’ credibility), and some fundamental principles of common law contracts. Justice O’Bonsawin favoured the evidence provided by Callow, saying that witnesses for the defendant were prone to exaggeration and answered questions in ways that were at odds with the written record. She found no evidence that Callow’s work was below standard. Furthermore, parties to a contract have a duty to act honestly in their dealings and not seek to undermine the other’s interests in bad faith. CMG actively deceived Callow by not disclosing their intention to terminate the contract. Justice O’Bonsawin awarded damages of just over $80,000 (the value of the contract after expenses and the value of equipment leased in anticipation of fulfilling the contract) to Callow.

Comment: Speak with a lawyer before breaking a contract, no matter how reasonable you believe your position to be.

About the image: Snow removal in Westmount (Montreal) Canada in 1944 by Conrad PoirierThis image is available from Bibliothèque et Archives nationales du Québec
Public Domain, Link

Condo Law Digest – December 2017

One Canada Square, Canary Wharf.jpg

TSCC No. 1556 and No. 1600 v. Owners of TSCC No. 1556, et al., 2017 ONSC 6542
Decision Date: November 2, 2017
http://canlii.ca/t/hn83r

TSCC No’s 1556 and 1600 are condominium corporations developed by Tridel Co. Their declarations include provisions permitting short-term rentals. (DelSuites, a company that provides short-term rentals and is part of the Tridel Group of Companies, manages units in both condominiums.) In this action, the corporations seek to prohibit short-term rentals by eliminating the provisions in the declarations that permit them. There have been no complaints regarding the rentals, however the corporations argue that AirBnB has changed the nature of the short-term rental market, and they seek to prevent future problems.

Justice Akbarali denied the application, reasoning that the declarations were not inconsistent with the Condominium Act, the relevant municipal zoning by-law, or the restrictive covenant registered on title to the lands on which the corporations sit. If the corporations want to amend their declarations, they will have to follow the provisions laid out in s. 107 of the Condominium Act (which specifies that 80% of unit owners must agree to the changes).

Comment: If you are purchasing a condominium unit and feel strongly for or against short-term rentals, make sure to have the declaration reviewed by a lawyer who specializes in condo law.

Peel Condo Corp 166 v. Ohri, 2017 ONSC 6438
Decision Date: October 26, 2017
http://canlii.ca/t/hmt8h

In this application, PCC No. 166 seeks a declaration that Mr. Ohri is in breach of the Condominium Act, and of the corporation’s Declaration and Rules. They seek an order requiring him to comply, and acknowledge that one of their purposes in seeking the order is to allow them to request he be removed from the Condominium, should he not comply. The conflict between the Board and Mr. Ohri dates to 1) a January 2016 altercation in the parking garage between Mr. Ohri and two Board members; and 2) an election of the Board of Directors in February 2016. Mr. Ohri supported his friend, a Mr. Singh. The Board posted a notice implying that residents should not vote for Mr. Singh. Mr. Singh lost the election by 9-10 votes when 20 votes against him were disqualified, based on Mr. Ohri’s alleged intimidation of unit owners into providing proxies. Mr. Singh sold his unit and moved out of the condominium.

Justice Price dismissed the application, finding the complaints against Mr. Ohri unfounded. Mr. Ohri has no history of violence, the police did not charge him, and video footage of two incidents from the surveillance camera were ambiguous as to who started things. Mr. Ohri was also able to provide a statement attesting to his good character signed by 15 residents of the building. Justice Price declined to order Mr. Ohri to comply with the Condominium Act, etc., saying that judges don’t generally order people to comply with the law.

Comment From Justice Price: “The court must be vigilant, especially in the context of a Board election in a condominium corporation, to ensure that its process is not manipulated by Board members who seek to maintain political control within the condominium by seeking a venue in which the condominium’s superior legal resources, and the indemnification terms of its rules, give it a significant advantage in a contest with a Unit owner.”

Pollock v. Wilson, 2017 HRTO 1476
Decision Date: November 8, 2017
http://canlii.ca/t/hnqvf

The applicant, Ms Pollock, is diabetic and relies on a service dog trained to recognize low blood sugar levels. Ms Wilson is her across-the-hall neighbor in a condominium. On Ms. Pollock’s door there is a sign alerting EMS personnel that there is a service dog in the unit. Ms. Wilson complained to the property manager about the sign, saying that such signs “serve to lower the tone of the building.” The property manager asked Ms. Pollock to remove the sign. (Apparently other signs, such as one proclaiming “World’s Best Grandma” were not similarly targeted.) In response, Ms. Pollock pasted additional notices and signs about disability and service dogs on her door. Condominium staff removed these notices; Ms. Pollock re-posted them. Finally, after speaking with a police officer, the property manager agreed that Ms. Pollock could continue to display the “service dog” sign. There was some additional back-and-forth among the two women, the building staff and the condominium board, about various issues related to the dog.

Ms Pollock filed a complaint against Ms Wilson with the Human Rights Tribunal. The adjudicator found that Ms Wilson’s complaints about the door created a poisoned environment for Ms Pollock and subjected her to adverse treatment. Ms Wilson was ordered to pay Ms Pollock $200 in compensation for injury to dignity, feelings, and self-respect.

About the image: One Canada Square at London, Docklands. By Garry KnightFlickr: 4:06 PM, CC BY-SA 2.0, Link

City of Toronto Mediation Pilot Program

Toronto sign (34289773236)

Over the past year my company has been on the roster for the City of Toronto’s Mediation Pilot Program. We attend selected meetings of the Committee of Adjustment and help neighbours work through their difficulties related to planning issues. I’ve become familiar with GFA (“gross floor area”) measurements, side-yard set-backs, and the profound love for and desire to protect trees shared by many of the city’s residents. The mediators in the program are always assigned to work with an independent planner. Leah Birnbaum, one of the planners on the roster, has written an article about her experiences with the program.

About the image: By Sebastiaan ter Burg from Utrecht, The Netherlands (Toronto sign) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

Condo Law Digest – November 2017

Basketball court with puddles after a rainstorm, 2014 09 21

Weir v. Peel Condominium Corporation No. 485, 2017 ONSC 6265
Decision Date: October 20, 2017
http://canlii.ca/t/hmnjf

Ms Weir is the owner of a penthouse unit in PCC No. 485. In June 2015 she noticed water pooling on the floor of her solarium during heavy rainfall from the southeast. The problem continued for about two years. Ms Weir was unable to use her solarium and hesitated to spend time away from her unit during rainstorms. (I will not summarize the two years of investigations, attempted repairs, and back-and-forth communication among property managers, the board, engineers for both parties, and several lawyers.)

In this action, Ms Weir claims that PCC No. 485 1) failed to meet its duty to maintain common elements; 2) entered her unit unlawfully; 3) levied arbitrary penalty fees; and 4) attacked her credibility. PCC No. 485 denies that its conduct was oppressive. Justice Petersen agreed and dismissed the application for the following reasons: 1) While the Corporation’s first response to the problem was “far from diligent” they did ultimately respond appropriately to what all agree was a problem with no obvious solution. 2) Although the Corporation did make one unlawful entry to Ms. Weir’s unit, a single incident does not amount to oppressive conduct. 3) Given that Ms. Weir retained counsel and commenced litigation while the Corporation was trying to discover the source of the leaks, it was not unreasonable for the Corporation to seek indemnification for its actual legal costs. (This was a “strong-arm tactic,” but permitted by the Condominium Act). 4) The Corporation’s expressed suspicion that Ms. Weir was responsible for the water leakage because she failed to seal the outside sliders on her windows was not evidence of harsh or vindictive conduct – especially as they continued to investigate the source of the leaks.

Comment: By mutual agreement, the parties did not pursue mediation.

Wexler v. Carleton Condominium Corporation No. 28, 2017 ONSC 5697
Decision Date: Sept 25, 2017
http://canlii.ca/t/h6g9f

Ms Wexler sued CCC No. 28 in small claims court for about $2500. (I don’t have the details.) She was not successful, and the judge awarded the defendant costs in the amount of $20,000. Ms Wexler appealed the costs award. In this decision, Justice O’Bonsawin set aside the small claims court cost decision and instead ordered her to pay costs in the amount of 15% of her original claim (so about $375).

Comment: I’m curious as to whether the parties attempted mediation, and if not why not. While I don’t know the details of Ms Wexler’s claim, spending $20K to defend a $2500 claim does not seem like a good business decision.

Keele Medical Properties Ltd. v. Toronto Standard Condominium Corporation No. 1786, 2017 ONSC 6137
Decision Date: October 16, 2017
http://canlii.ca/t/h7234

This is a decision on costs following from a March 2017 decision regarding a condominium lien of about $243,000. [http://canlii.ca/t/h35m3] At that time, Justice Chiappetta found that the lien was valid and enforceable. TSCC No. 1786 asked for costs of about $164,000 on a full indemnity basis. Both parties made offers to settle before the trial. Chiappetta found that it was “fair and reasonable” for TSCC No. 1786 to seek full indemnity costs, and that the time and hourly rate were likewise reasonable.

About the Image: Basketball court with puddles after a rainstorm, 2014 09 21 by booledozer [Public domain], via Wikimedia Commons

Condo Law Digest – October 2017

"For Sale" sign at Berkley Mill, Norfolk, Virginia, April 16, 1927 (16052444819).jpg

Shah v. Southdown Towns Ltd., 2017 ONSC 5391
Decision Date: Sept 11, 2017
http://canlii.ca/t/h5w8p

In the fall of 2016 each of the five applicants entered into a Purchase and Sale Agreement to buy a pre-construction condominium unit and a parking spot from Southdown Towns. (Mr. Shah was the first of the five applicants to enter into the Agreement, and he dealt with Southdown on behalf of the others.) Each purchaser paid a deposit and agreed to provide proof of mortgage approval within 10 days of the acceptance of the Agreement. If this condition was not met, Southdown Towns had the option to terminate the Agreement. In Feb 2017 Southdown sent Mr. Shah an email requesting confirmation of mortgage approval. A month later counsel for Southdown sent a letter to each of the applicants requesting the mortgage approval by March 30, and warning them that Southdown Towns would exercise its rights to terminate the Agreement if they did not comply.

Mr. Shah claims that he snail-mailed the documents on March 28, but provided nothing to support this claim. On March 31 he dropped off the documents at the sales center. These documents proved to be inadequate. On the same day Southdown Towns wrote to each purchaser, terminating the Purchase and Sale Agreement. The applicants finally provided valid mortgage approvals in mid-April. In this action, the Applicants ask the court for “relief from forfeiture;” that is, for the Purchase and Sale Agreement to go ahead. They estimate that each of them will lose $150,000 to $200,000 in potential value (the increase in value of the units between time of purchase and move-in date) if relief is not granted.

Justice Emory declined to grant the requested relief, saying that the Applicants had not exercised reasonable diligence to comply with the Agreement

Comment: The Applicants will receive their deposits back.

Patel v. Davis, 2017 ONSC 5496
Decision Date: Sept 22, 2017
http://canlii.ca/t/h694x

In June 2017 Mr. Patel entered into a valid and enforceable agreement to purchase a condominium unit from Mr. Davis, with a closing date of August 31, 2017. Sometime in July Mr. Davis seems to have had a change of heart and refused to complete the sale. In this action, Mr. Patel seeks an order that Mr. Davis deliver clear title to the property.

Justice Peterson granted the application, stating that the condominium is sufficiently unique (large footprint, two bedrooms, overlooking a park and with a wheelchair-accessible bathroom), that another comparable property would not be readily available.

Comment: Mr. Davis was not represented by counsel, did not file a defense, and did not appear in Court.

Zordel v. MTCC No. 949, 2017 ONSC 5544
Decision Date: Sept 19, 2017
http://canlii.ca/t/h67pp

The applicants are owners of units in MTCC No. 949. In June 2016 the Corporation switched its cable TV and internet provider from Rogers to a new service provider, Frontline. As previously, the costs for these services are charged as a common expense to unit owners. The applicants 1) challenge the jurisdiction of MTCC No. 949 to enter into this agreement. 2) Assert that MTCC No. 949 should have sought the approval of 2/3s of unit owners before making the switch. 3) Seek an order requiring MTCC No. 949 to allow them to opt out of the service. 4) Submit that MTCC No. 949 has acted oppressively towards them. 5) Seek clarification from court as to owner expectations when meetings are requested.

Justice Cavanagh dismissed the application: 1) MTCC No. 949 does have jurisdiction, according to Subsections 17(1) and (2) of the Condominium Act, its own by-laws, and the decision in Mancuso v. York Condominium Corp. No. 216. 2) MTCC No. 949 did not require approval of 2/3s of unit owners as the change in service is not “substantial.” 3) As MTCC had jurisdiction to make the bulk services agreement, unit owners do not have the right to opt-out of it. 4) The conduct of MTCC No. 949 towards the applicants does not meet the threshold of oppression. 5) This case is not a proper one to clarify the issues around meeting requisitions by owners.

I missed this decision when it was released in July:

Carleton Condominium Corporation No. 282 v Yahoo! Inc., 2017 ONSC 4385
Decision Date: July 18, 2017
http://canlii.ca/t/h4w8v

In November 2016 an individual with the alias “Ian Fleming” sent emails to the owners and occupants of CCC No. 282, accusing the Board of unethical behaviour (accepting kickbacks) and harassment of staff. In this decision Justice Ryan Bell granted a “Norwich order” to CCC No. 282 requiring Yahoo Canada to disclose information necessary to obtain the identity of the author of these emails.

About the image: State Archives of North Carolinahttps://www.flickr.com/photos/north-carolina-state-archives/16052444819/, No restrictions, Link

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