Legal

May 16, 2019 Published by Vancouver Chapter - By James Davidson

Condo Cases Across Canada

From CCI Vancouver Condo News, Spring Issue 2019

British Columbia

Interville Development Limited Partnership v. The Owners, Strata Plan BCS2313
(BC Supreme Court) January 30, 2019 Appeal Dismissed.

Court of Appeal upholds strata corporation’s rental restriction bylaw.

Valid Shared Facilities Agreement existed between the parties

The Plaintiff, Interville, had developed a large commercial and residential project, which ultimately included six separate parcels, one of which was the Defendant strata plan. Prior to proceeding with the development, Interville had entered into a written "cost sharing agreement" (in relation to certain matters to be shared by the various parcels) as the then owner of the six parcels. After its creation, the Defendant strata corporation had for a number of years contributed to the shared costs in accordance with the cost sharing agreement. The strata corporation then alleged that this had been done in error, and asserted that it had no such obligation because this is a "positive covenant" that is not binding upon the strata corporation as a subsequent "owner" of one of the six parcels (without the strata corporation having "signed on" to the agreement).

The Court held that the strata corporation was bound by the cost-sharing agreement because the strata corporation had verbally agreed to be bound by the agreement. The Court said:

I conclude that upon the Strata Corporation coming into existence, an agreement was formed between the Strata Corporation and Interville pursuant to which the Strata Corporation agreed to pay 23.72% of the Keefer Steps Costs as invoiced by Interville from time to time. The material terms of the agreement were as expressed in writing in the Disclosure Statement: the Strata Corporation would pay 23.72% of the Keefer Steps Costs, based on the buildable area of the Firenze. In the circumstances, it is not necessary to consider whether, in the absence of an agreement, the Strata Corporation would be unjustly enriched by not paying a proportionate share of the Keefer Steps Costs.

I declare that the Strata Corporation is and was legally obliged to pay 23.72% of the Keefer Steps Costs, as invoiced by Interville from time to time. Interville shall have judgment against the Strata Corporation in an amount reflecting the unpaid obligation to date. If the parties are unable to agree as to the specific quantum of the judgment, they have leave to appear. Interville shall have its costs at Scale B.

Manitoba

Winnipeg Condominium Corp. 479 v. 520 Portage Avenue Ltd. et al (Manitoba Court of Queen’s Bench) December 13, 2018

Condominium corporation declared to be beneficial owner of parking unit

The Developer had made the seven-stall parking area in the building a unit rather than a common element. The Developer retained title to this parking unit and, while the Developer still had control of the condominium corporation, the Developer entered into an agreement to lease the parking unit to the condominium corporation.

The condominium corporation subsequently asserted that the lease constituted a breach of the Developer’s fiduciary duties and sought a declaration that the parking unit "is a common asset of the Condominium Corporation" and an order for the transfer of the unit from the Developer to the Condominium Corporation.

The Court held that the Developer had not provided adequate disclosure of the intention to retain and lease the parking unit. The Court said:

The Parking Lease does provide disclosure that the Condominium Corporation is merely a tenant of the parking area and the Developer is the landlord, and that there is an option by the tenant to purchase the parking area from the Developer for $167,000. However, the Parking Lease between the Developer and the Condominium Corporation is not referred to in the Condominium Declaration or in the Disclosure and Status Certificates set out in the evidence. The Parking Lease is also inconsistent with the Condominium Declaration and Plan and the Disclosure and Status Certificates, which are the documents that govern the legal relationship in this matter. It is inconsistent because the Parking Lease refers to the retention of the parking area by the Developer, while the Condominium Plan and Declaration as well as the Disclosure and Status Certificates make no reference to this, but instead read as though parking is a common element. In my view, merely providing a copy of the Parking Lease constituted insufficient disclosure to unit purchasers in this case. This case is therefore governed by the principle set out in the Newrey Holdings case.

Ontario

LaFramboise v. York Condominium Corp. No. 365 (Ontario Superior Court) January 15, 2019

Court determines that borrowing bylaw was properly passed

The condominium corporation, while under the control of an administrator, sought to pass a borrowing bylaw at a meeting of the owners. On a subsequent uncontested application, the administrator sought the Court’s direction as to whether or not the bylaw had been properly passed.

At the meeting called to consider the bylaw, the owners of a majority of the units had been in attendance (either in person or by proxy). A majority of those in attendance had voted in favour of passing the by-law. However, those in favour did not represent a majority of all units in the condominium.

The Court held that the bylaw had been validly passed. The Court said:

The correct and reasonable interpretation of the current provisions of section 56(10) is that those provisions did not on their face (despite any arguable punctuation errors) amend the requirements in section 50 and 53 of the Act.

A majority of all unit owners were in attendance, and a majority of those present unit owners approved the bylaw. The by-law in question has been validly passed.

Editorial Note: In my respectful view, this case was wrongly decided. The wording of Section 56 (10) of the Condominium Act, 1998 is clear: For a bylaw to be passed, the owners of a majority of the units in the corporation must vote in favour of confirming the bylaw. I suspect that this case might have been decided differently had the application been contested.

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James Davidson is one of the founding partners of Davidson Houle Allen LLP and has been practicing condominium law for over 30 years. He represents condominium corporations, their directors, owners, and insurers throughout Eastern Ontario. His experience also includes building deficiencies, shared property interests, co-ownership and construction law. Jim is proud to be an associate (ACCI) and also a fellow (FCCI) of the Canadian Condominium Institute.

Davidson Houle Allen LLP
James Davidson
Tel: 613-231-8243
www.davidsoncondolaw.ca
james@davidsoncondolaw.ca