Legal

July 19, 2017 Published by Toronto and Area Chapter - By John De Vellis, Joel Berkovitz

Decisions From the Courts

From the Summer 2017 issue of the CCI Toronto Condovoice Magazine.

Toronto Standard Condominium Corporation No. 2395 v. Joyce Wong (Ontario Superior Court of Justice, December 20, 2016)

Harassment of managers or staff is a serious problem for condo corporations that must be addressed.

This case, like many such cases, features increasingly disturbing and threatening behaviour that prompted the condominium corporation to take legal action. The Respondent owner initially accused the manager of having abused her pet, intruding on her privacy, and damaging her property. But it got worse. The owner caused a disturbance at the AGM, which included shoving her camera in people's faces, taking their photographs despite being asked to stop, and finally, grabbing a staff member by the arm in an attempt to take her photo. She subsequently left voicemail messages for the property manager telling her to hide and "be careful" if she saw the owner coming. The Court noted that, on another occasion, the owner "violently banged on and kicked the door to the property management office as [the manager] was closing it." These are just some of the "inappropriate" and "bizarre" (according to the court) behaviour on the part of the owner.

The condo corporation sought an order that the owner be subjected to a mental health examination by a health practitioner and also for various forms of relief against the owner.

The request for an order for a mental health assessment was denied. Such orders are to be granted only in rare circumstances and only when there is evidence to suggest that the person is incapable of understanding information with respect to the proceeding or that she is unable to understand the consequences of a decision in the proceeding.

The Court was satisfied, however, that the owner's conduct created a potential danger within the condominium, contrary to s. 117 of the Act, as a result of her harassing, threatening, intimidating, verbally abusing and physically assaulting the condo corporation's staff. The Court found the owner also breached the condominium's 'quiet enjoyment' rule by creating noise and nuisance, including yelling, using threatening language and attempting to instigate a fight in the common elements.

Notably, the Court also declared that the owner's conduct constitutes workplace harassment under the Occupational Health and Safety Act (OHSA), which defines harassment as "engaging in a course of vexatious comment or conduct against a worker in a workplace that is known or ought reasonably to be known to be unwelcome."

Authors' Note: The case is welcome news for condo corporations in that it sends another message that abusive and harassing behaviour will not be tolerated. The court's declaration that the owner's behaviour was in breach of the workplace harassment provisions of the OHSA is also significant - it means that the OHSA can be used as a formal legal tool in enforcement actions against residents who abuse or harass condominium management or staff.

The decision regarding the requested mental health examination is perhaps not surprising, but disappointing nonetheless. Often these types of cases are prolonged and made more expensive and stressful for all involved due to underlying mental health issues. The test the courts have imposed, however, requires the condo corporation to, essentially, prove the very thing that the test is meant to determine: namely, that the person is incapable of understanding the consequences of his/her actions.

2308478 Ontario Inc. v. York Region Condominium Corp. No. 715 (Ontario Superior Court of Justice, December 9, 2016)

In this case a unit owner sought an order appointing an administrator to replace the Board of Directors the unit owner argued were not acting in the best interests of the corporation. For several years the board neglected its repair and maintenance responsibilities and failed to keep an adequate reserve fund. Only shortly before this application was commenced, and in part based upon the urging of the unit owner, did the corporation begin to take steps to address the repair backlog and to rebuild the reserve fund.

The Court reviewed the five factors to be considered for the appointment of an administrator:

a) a demonstrated inability to manage the corporation;

b) substantial misconduct or mismanagement;

c) the appointment of an administrator is necessary to bring order;

d) the presence of a struggle within the corporation among competing groups that impedes proper governance; and

e) whether the appointment of an administrator has any reasonable prospect of bringing to order the affairs of the corporation.

While the Court was sympathetic to the unit owner's case, and recognized that it was the unit owner's urging that prompted the corporation's actions to address its problems, it ultimately ruled against the unit owner and refused to appoint an administrator. Given that the board had begun to take steps to address its problems, the Court found that an administrator was not required at this time, and commented that an administrator could only be appointed in situations that were significantly more grave than that facing this condo. In assessing costs the Court did, however, recognize the positive contribution made by the unit owner, and only awarded $2,500 to the condo corporation.

Authors' Note: This case again demonstrates how difficult it is to obtain an order to appoint an administrator. The courts are loathe to interfere with the democratic affairs of a condo corporation unless absolutely necessary. Applicants seeking the appointment of an administrator should have solid evidence to show that the five factors above are satisfied, and should give serious consideration to whether to continue with an application when the corporation has begun to take steps to rectify its problems.

Niagara North Condominium Corp. No. 6 v. Temedio (Ontario Superior Court of Justice, February 7, 2017)

This case concerns a compliance application brought by the condo corporation against a unit owner whose tenants were creating noise disturbances by stomping loudly, dropping heavy objects, shouting obscenities from their balcony, and who also had an aggressive encounter with one of the corporation's superintendents. Over several years numerous complaints were received, and the tenants did not respond to the corporation's letters demanding that they comply.

The corporation sought an order that the tenants be evicted, or alternatively, forcing the tenants and owner to comply with the corporation's rules.

The Court granted the order that the tenants and owner comply with the rules, but refused to grant an eviction. In so doing, the Court expressed that eviction was a draconian and extreme order which should be reserved for cases where there is an ongoing refusal to comply with the rules. In light of what the Court saw as a confrontational and aggressive approach by the condominium, it granted only a small cost award to the corporation.

Authors' Note: For condos dealing with unruly tenants, this decision will no doubt be unwelcome. Rather than immediately seeking an eviction order, this case suggests that corporations must first obtain an order that the residents comply with the declaration or rules, and only upon a breach of that order can eviction be granted. Each case is fact specific, however, and more extreme behaviour may justify seeking an eviction order immediately. Corporations should be aware that, in dealing with compliance issues, their conduct in seeking compliance will impact upon the amount of costs they are able to obtain from the unit owner or tenant.

Law Society of Upper Canada v. Cho (Law Society Tribunal, March 8, 2017)

Meerai Cho's case drew headline attention when it was discovered that she, in acting for her developer client, had released $13 million in purchasers' deposits to the developer. The developer, in turn, took the money and fled the country, with the condominium project the deposits were slated for never even starting development.

Condominium developers are required to have their lawyers hold deposits for unit purchases in trust and may only release the funds in specific circumstances. Ms. Cho, in releasing the trust funds to the developer, breached the terms of this trust.

Ms. Cho pled guilty to criminal charges of breach of trust and was sentenced to a jail term of 3.5 years. By pleading guilty, Ms. Cho effectively acknowledged that she knew or suspected that there was fraud.

Following the conclusion of Ms. Cho's criminal case, the Law Society was tasked with determining what should be done with her license. Ms. Cho asked for the ability to surrender her license rather than have it revoked. The Law Society refused this request and chose to revoke her license. While the effect is the same, the revocation of a lawyer's license is the strongest punishment available to the Law Society, and is meant to deter any similar conduct.

Authors' Note: This case is an important reminder of the serious obligations placed on developer's counsel. If purchasers lose faith that their deposits will be held safely in trust, the practice of condominium pre-sales could be seriously affected.