Legal

July 1, 2020 Published by Toronto and Area Chapter - By MEGAN MACKEY

The Oppression Remedy Comes into Focus

From the Summer 2020 issue of the CCI Toronto Condovoice Magazine.

A Look at When Relief is Available and What Remedy Might Be Granted

A number of recent judicial decisions are beginning to bring the Condominium Act's oppression remedy into focus. Borrowed from corporate law, the oppression remedy can be found at s. 135 of Ontario's Condominium Act, 1998. It is designed to guard against unfair treatment. The section allows the owner of a condominium unit, or a mortgagee, developer, or condominium corporation, to apply directly to the Ontario Superior Court of Justice for relief. This is unusual because the Condominium Act directs many disputes to alternative dispute resolution, whether via mediation, arbitration or at the recently launched Condominium Authority Tribunal.

In applications for relief from oppression, the court decides if the complained-of conduct is oppressive. Judges are authorized to make any order they deem proper according to the situation. While that sounds like a pretty sweeping set of powers, in practice, Ontario judges have only used this power to grant remedies where oppression has been clearly established.

The Test
Courts will only intervene if strict legal criteria are met. The two-pronged test for oppression requires applicants to establish:

• First, that the condominium corporation's conduct breached their reasonable expectations,
• Second, that the violation amounts to oppression, unfair prejudice or unfair disregard.

Reasonable expectations are judged on an objective basis, which takes us out of the realm of personal preferences and individual wish lists.

The language of section 135 itself limits the kind of relief that can be obtained. Tenants should keep in mind that the section only allows applications by "an owner, a corporation, a declarant or a mortgagee of a unit," which means that tenants cannot seek a remedy for oppression. A unit owner's recent attempt to claim against individual board members for oppression failed because directors are not listed as a party against whom oppression can be claimed.

In recent years, unit owners have begun applying for relief from oppression in great numbers. These decisions are giving legal observers a better idea of exactly when relief is available and if so, what remedy might be granted.

Decisions are fact-specific and turn on the context of a particular case. Looking at cases where courts have found conduct to be oppressive, the common theme seems to be a conscious act by the board against a unit owner; inadvertent or unknowing unfairness will generally not qualify.

A classic example came in the 2015 case of Wu v. Peel Condominium Corporation No. 245, when we acted for the owner of a top-floor condominium unit badly affected by noise and vibration of the building's mechanical equipment. Despite commissioning tests and acknowledging the problem, the corporation took no significant steps to address the problem over the next four years. It withheld and edited a sound test report. The board of directors subsequently threatened to register a lien over its demand for $150 for the cost of producing documents the owner requested. At one stage, the condominium corporation advised it would not perform work because of an alleged breach of city by-laws connected to the layout of our client's unit, prompting the owner to finally apply to the court for relief from oppression. The presiding judge found the condominium corporation had acted oppressively. It was ordered to pay our client $30,000 in damages and fix the problem.

In the 2013 case of Dyke v. MTCC No. 972, the owner established that the condominium corporation acted oppressively when it permitted a dance studio to operate in the unit above. Initially, the condominium's security team verified the noise was excessive. After the owner threatened legal action over the board's failure to find a solution, the corporation denied any issue existed. In doing so, the condominium had acted in a way that "unfairly disregards the interests of the Applicant in failing to take adequate steps to enforce its own rules," the judge concluded.

The most recent word on oppression in condominiums came in another of our cases, in the Court of Appeal's recently ruling in Noguera v. Muskoka Condominium Corporation No. 22. We acted for a couple who ran into trouble after purchasing an adjoining unit to their own after they had secured board approval to remove the wall between the two units. Once the work had been completed, a differently constituted board of directors attempted to retract the corporation's permission for the work. The president of the board publicly disparaged our clients and banned them from walking on shared lakeside path based on unsubstantiated allegations of window peeping. In fact, members of the board of directors were caught on camera peeping into our clients' unit.

The original judge found the condominium corporation's conduct amounted to oppression. She held that the board could not retract approval for the alterations, that the board could not prohibit our clients from walking on the lakeside path, and that our clients were entitled to $10,000 in damages due to the condominium's oppressive behaviour. This award was unanimously upheld on appeal.

Remedies – So what remedy might you receive if your condominium corporation acts oppressively?

Part of the reason the Wu case became such a beacon for owners unhappy with their condominium boards was the $30,000 general damages award, which was at the time the largest seen in this type of case. In Noguera, the judge cited the couple's reduced enjoyment of their units over the entire episode and the board's persistent poor conduct as justification for her general damages award of $10,000.

And while some other judges have followed suit – awarding damages for past suffering endured by unit owners – is not the usual result.

The judge in the dance studio case awarded $40,000 in special damages, but this was to cover the applicant's actual out-of-pocket moving costs. The judge did not rule on the owner's additional claims for compensation for pain and suffering.

Judges have awarded nominal amounts in damages for oppressive behaviour by condominium corporations when the court is critical of the applicants' behaviour. For example, a unit owner who took a "strange and unreasonable" position during litigation over disputed facilities access was awarded just $500 in the 2012 case of Sarah Computer Consulting Inc. v. Peel Condominium Corporation #421, after the condominium was found to have acted oppressively by deactivating his fob key to get his attention.

In the 2015 case of Couture v TSCC No. 2187, the unit owner was awarded just $1,000 in damages for oppression by a condominium corporation that engaged in "significant wrongful conduct" after the judge questioned her part in the "horrendous escalation of hostilities" over a parking space dispute.

In some instances, as in the recent case of Siemon v. Perth Standard Condominium Corporation, the remedy is no more than a halt to the oppressive behaviour. The judge hearing that matter found that the applicants – a group of retirement home unit owners – had established that the manner in which the condominium charged for services was oppressive. The judge declined to award any damages because there was no proof of loss in what was essentially a business dispute.

What is Not Oppression
Many unit owners feel slighted by a board carrying out any one of its wide array of functions. Condominium residents who are thinking of claiming relief from oppression often compare their situation to cases in which a court found conduct to be oppressive. However, when considering whether to bring a claim relief from oppression, it is just as important to review circumstances courts do not consider to be oppressive. A series of recent judgments offers guidance on the subject.

The lesson to be drawn from the case of Ryan v York Condominium Corporation No. 340 is that board ineptitude is not the same as oppression. The owner took his condominium to court after his unit was rendered uninhabitable for years due to mould caused by the condominium's longstanding water penetration issues. Justice Perell ordered the condominium to pay the owner almost $70,000 in damages after concluding it was "patently not reasonable" for it to fail to fix a decades-old water penetration problem, breaching its repair obligations under the Condominium Act. However, the judge stopped short of labelling the corporation's conduct oppressive, noting that both parties essentially agreed that there was a need for action on the water infiltration problem. The board had tried to solve the issue. The board's "conduct was ineffective until recently, but it was not abusive or oppressive," Justice Perell added.

Meanwhile, two decisions involving commercial activity suggest judges will look kindly on condominium corporations where allegations of oppression arise because the condominium is enforcing its rules, bylaws and other corporation documents.

In the 2012 case of TSCC No. 1633 v. Baghai Development Limited, the Court of Appeal sided with the board of a Toronto condominium seeking to ban a grocery store from displaying its merchandise on the sidewalk. The lease between the store (a tenant) and the unit owner expressly allowed for this. The practise went on for some years before the condominium sought to remove the display. The condominium argued the practice violated both its declaration and bylaws.

The store and its landlord – the unit owner – responded by bringing an application for relief from oppression. They claimed the condominium had earlier agreed with the practise. The Court of Appeal held there was no permanent waiver of the condominium's rights and permitted the condominium corporation to enforce its rules.

In MTCC No. 1272 v. Beach Development (Phase II) Corporation, the Court of Appeal ruled that the oppression remedy was not available to condominium owners who felt shortchanged by the lack of a cost-sharing agreement with their original developer, which had retained the ground f loor on a freehold basis for lease to commercial and retail establishments. The situation was not oppressive. Instead, it was held to be a business decision properly disclosed to owners in the original disclosure documents.

The Future of the Oppression Remedy
Although this article focuses on applications brought by unit owners, the oppression remedy can help condominium corporations. In another recent decision, Toronto Standard Condominium Corporation No. 2051 v. Georgian Clairlea Inc. et al, the Court of Appeal granted the condominium corporation relief from oppression by significantly reducing the value of mortgages that the developer had registered against corporation units.

We are likely just beginning to see the ways in which this tool will shape the condominium industry. There is no doubt that as more judicial decisions come down, the breadth and power of this tool will come into focus.