Legal

June 24, 2024 Published by Toronto and Area Chapter - By Justin McLarty, Michael Prosia, Jason Rivait

Decisions From The Courts

From the Spring 2024 issue of CCI Toronto Condovoice Magazine.

No Shared Facilities Agreement – No Problem • Noise And Oppression • Threshold To Force An Owner To Vacate And Sell

Carleton Condominium Corporation No. 519 v. Ottawa-Carleton Standard Condominium Corporation No. 656 et al., 2023 ONCA 848 (CanLII)

Condominium corporations across Ontario will often share facilities or services with a neighbouring land owner and in many cases the neighbouring land owner is also a condominium corporation. When the parties have papered their understanding, the shared use, maintenance, repair and costs are typically set out in a shared facilities agreement.

If a condominium corporation has the right to use the property or assets of an adjacent land owner and in the absence of a shared facilities agreement, is the party that benefits from the use responsible to contribute to the costs to maintain and repair?

This case determined whether Ottawa-Carleton Standard Condominium Corporation No. 656 (“OCSCC 656”) and Carleton Condominium Corporation No. 522 (“CCC 522”) are responsible to share in the costs to replace a major piece of electrical equipment located on the land of Carleton Condominium Corporation No. 519 (“CCC 519”). The electrical equipment serves all three condominiums and all three condominiums are dependent upon such equipment to direct the power supply from Hydro Ottawa to their respective communities.

The position of CCC 519, where the electrical equipment is located, is that OCSCC 566 and CCC 522 must contribute to the replacement costs based on the doctrine of unjust enrichment. The three-part test to establish unjust enrichment is set out below:

1. Has there been an enrichment;
2. Has there been a corresponding deprivation; and
3. Is there a juristic reason for the enrichment? This means a reason/explanation for the enrichment that makes it fair and “just”.

The court was advised that CCC 522 agreed to contribute to the replacement costs, but OCSCC 566 argued that the governing documents of OCSCC 566, and for that matter the Condominium Act, 1998 (the “Act”), did not obligate OCSCC 566 to contribute to the costs of the common elements/assets of CCC 519.

The Superior Court of Justice found that the principles of unjust enrichment apply in this case and that CCC 522 and OCSCC 566 were obligated to share equitably in the costs to replace the equipment. The Court of Appeal upheld the lower court’s decision.

The Takeaway
The main takeaway from this decision is no shared facilities agreement – no problem. The principles applied in this case will also benefit those parties where a shared facilities agreement is in place but vague with respect to shared cost responsibilities.

To put it another way, a shared facilities agreement does not need to expressly provide that a party to the shared facilities agreement is responsible to contribute to the costs to maintain and repair an item so long as the other parties are able to meet the aforementioned unjust enrichment test. The principles of reciprocal benefit and burden will apply to such relationships.

In fact, many shared facilities agreements will include verbiage as follows:

The continued enjoyment by any Owner Party hereto to any easement right or privilege granted or referred to shall be dependent upon that Owner Party contributing to the cost and expense of the operation, maintenance, repair, replacement and inspection of that easement, right or privilege in accordance therewith. The failure by any Owner Party to so contribute shall lead to the suspension of its enjoyment of such easement, right or privilege.

If a condominium corporation has been left with the bag for many years, now would be a good time to revisit those relationships and shared obligations.

Missal v. York Condominium Corporation No. 504, 2023 ONSC 4908

Mr. Missal had been a unit owner within York Condominium Corporation No. 504 (“YCC 504”) since 1998. In 2007, he says that the neighbour above him installed hardwood flooring in a manner that resulted in excessive noise in his unit. Mr. Missal says he suffered with this noise for the following 13 years. Mr. issal complained regularly to his neighbour above him about the noise, including Ms. Seppanen, who purchased the unit above him in 2011.

At the time of the sale of the neighbouring unit, Mr. Missal raised his noise issues with YCC 504. However, on the evidence, he did not raise any noise complaints again with YCC 504 until early 2020, for the first time. Unsatisfied with YCC 504’s efforts, Mr. Missal commenced a court application against both Ms. Seppanen and YCC 504 on October 1, 2020, seeking various declarations, including an order declaring that YCC 504’s conduct was oppressive.

Mr. Missal ultimately settled with Ms. Seppanen on the basis that she install a sound attenuation barrier and carpeting. However, Mr. Missal proceeded to court against YCC 504. The court dismissed Mr. Missal’s application in its entirety.

The court noted that under Section 17(3) of the Act, YCC 504 had an obligation to take all reasonable steps to ensure that owners comply with the Act and governing documents. The court found that YCC 504 had met its obligations, and had cooperated with Ms. Seppanen to permit the required renovations to her unit to address Mr. Missal’s noise complaints. The court further  placed emphasis on the fact that YCC 504’s efforts were made during the COVID-19 pandemic, and that Mr. Missal had not complained to them about the noise issues for nearly 13 years. Furthermore, notwithstanding the commencement of the application in October 2020, YCC 504 continued to actively deal with attempting to resolve Mr. Missal’s noise complaints.

Of note, YCC 504 also attempted to argue that the proceeding should have been stayed on the basis of Mr. Missal’s failure to properly disclose his settlement with Ms. Seppanen. This argument was
rejected, with the court noting that this obligation only applied to settlement agreements which would change the “litigation landscape” between the existing parties.

Unanswered, the court noted that none of the parties had addressed the issue of the CAT’s jurisdiction to handle noise complaints, and the court made no ruling on this issue.

The Takeaway
The objective evidence in this case supported Mr. Missal’s contention that he had suffered from excessive noise and vibration in his unit for over a decade. But in failing to complain to YCC 504 about the problem, YCC 504 had no opportunity to address these issues.

This decision serves as a reminder that the courts will fundamentally look at whether a condominium corporation has acted reasonably in discharging its obligations. It also serves as a reminder that parties, and especially unit owners, should give corporations reasonable opportunity to address their concerns before resorting to legal action.

Toronto Standard Condominium Corporation No. 2581 v. Paterno, 2023 ONSC 4343 and 2023 ONSC 7002

Not everyone is cut out for living in close proximity to others and condominiums, by their nature, can be confronted with significant challenges when a resident disturbs and threatens others.

In the most difficult situations, which can include threats or actual violence against other residents, condominium boards and managers naturally begin to ask whether the offending resident can be removed from the property. While removing a tenant is a difficult process in and of itself, this question is further complicated when the individual in question also owns the unit.

The ongoing saga of Toronto Standard Condominium Corporation No. 2581 v. Paterno (“Paterno”) shows the very high threshold that courts will set to grant an order that an owner must sell their unit.

Previous decisions have described an order making an owner sell their unit as requiring a “perfect storm” of factors justifying such an order, and that requirement continues to apply in the Paterno decisions. The standard requires serious and persistent conduct that has an exceptionally large impact on the community, and where the owner was incorrigible and unmanageable.

In Paterno, the respondent unit owner had a substance abuse issue and conducted himself in a manner described by the court as “aggressive, rude, profane, and disrespectful”. Mr. Paterno engaged in a number of offensive behaviours, including:

• Abusing and threatening property management and security staff;
• Allowing his large dogs to run free and soil the common elements;
• Sending sexually explicit messages to female staff members;
• Exposing himself on several occasions;
• Refusing to abide by COVID-19 protocols, for instance by breaking into the pool;
• Accosting other residents and destroying their property; and
• Physically attacking security staff.

These incidents occurred over several years and some of the incidents resulted in criminal convictions against Mr. Paterno. The court found in its first decision that Mr. Paterno violated Section 117(1) of the Act. The court also found that while under the influence of intoxicants Mr. Paterno was unsuited for communal living. While the court found that Section 117(1) of the Act has been violated, it also decided that an order to vacate and sell would be too harsh. The court found that Mr. Paterno should be given an opportunity to rehabilitate himself and to prove that he could be a responsible member of the condominium community.

In the first decision the court granted what it described as a “conditional zero-tolerance eviction order”. If Mr. Paterno were to breach any one of five conditions, Toronto Standard Condominium Corporation No. 2581 (“TSCC 2581”) could bring a motion to have Mr. Paterno immediately evicted from the property and required to sell his unit within 120 days.

The first order in Paterno was made in July of last year and TSCC 2581 believed that it the order was violated quickly, as it brought the motion to have Mr. Paterno evicted and required to  sell his unit by November. The court looked unfavourably on the motion, to say the least.

Mr. Paterno had continued to post TikTok videos that seemingly criticized TSCC 2581 and had rather strangely decided to campaign for a position on the Board. Issues with the TikTok postings and issues over package deliveries resulted in heated exchanges between Mr. Paterno and TSCC 2581’s security staff.

TSCC 2581 retained additional security that was “tactically trained for riots”. At the same time, Mr. Paterno offered to rent out his unit and live away from the property for a period of up to two years. Negotiations did not progress and TSCC 2581 brought the eviction motion on an urgent basis.

The court was clear that the previous “conditional zero-tolerance eviction order” required either Mr. Paterno contemptuously breaching the court’s first order or breaching the Act. The court did find that Mr. Paterno has misbehaved on some occasions, but clearly did not feel that there was sufficient evidence to establish contemptuous behaviour or a breach of the Act.

The Takeaway
The court again refused to grant an order requiring Mr. Paterno to vacate and sell his unit, as it found that there was a less draconian and fair order that could be made. Specifically, the court ordered that:

• Mr. Paterno vacate his unit and not attend at the property;
• That Mr. Paterno could not live in his unit again without the consent of TSCC 2581, which was not to be unreasonably withheld; and
• That Mr. Paterno could not live in his unit again until December 31, 2025.

Breaching a previous court order is typically one of the main requirements in successfully obtaining an order that an owner must sell their unit, but the court’s decision in the November motion shows that a motion to enforce a previous order should not be brought hastily. The court’s decision again shows that an order requiring an owner to sell their unit is a true last resort, especially in circumstances where a less draconian remedy can be fashioned.

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Justin McLarty, Partner, Miller Thomson LLP

Michael Prosia, Partner, Miller Thomson LLP

Jason Rivait, Partner, Miller Thomson LLP