Recap of the Top Cases and Stories of 2022: Part 1

It is time for our annual review of the top condominium stories of the year. Unlike the last two years, COVID-19 does not dominate the top stories of the year.  Spoiler: This year the Condominium Authority Tribunal (CAT) dominated the top stories list. The CAT was so dominant we created its own post. You’ll have to wait until Part 2 for the top CAT cases of the year. In no particular order, here is our list of the most memorable cases and legislative changes for 2022.

Oppression

One of the areas where the Superior Court of Justice still has jurisdiction is over oppression claims under section 135 (although the parties can choose to use mediation/arbitration instead). The court released a few decisions this year. As a reminder, for oppression claims the court will determine whether there has been a breach of the reasonable expectations of the claimant and whether that breach was oppressive, unfairly prejudicial, or unfairly disregards the interests of the claimant.  Here are two examples from 2022:

• It was not oppressive for the condominium to use the process in the Condominium Act, 1998, to amend its declaration to require the units to share the common expenses based on unit size:   https://www.canlii.org/en/on/onsc/doc/2022/2022onsc5967/2022onsc5967.html

   

• A condominium’s delays in addressing the owner’s concerns about the garbage chute and compactor, which caused disruptive noise, was oppressive. The owner had a reasonable expectation that the condominium would take her concerns seriously, especially when it was aware of the problem for 7 years. The condominium advising the owner it would not do further work unless the owner withdrew her application was reprisal. The court ordered $30,000 in damages and ordered the condominium to complete the remedial work noted in its expert’s proposal. https://www.canlii.org/en/on/onsc/doc/2022/2022onsc3409/2022onsc3409.html

Dangerous Activities

The Superior Court of Justice also has jurisdiction to hear matters involving conditions or activities that may cause damage to the property or injury to persons under subsection 117(1) of the Condominium Act, 1998. Here are a few examples from 2022:

• The court ordered the tenants to muzzle and leash their dogs when on the common elements after the dogs viciously attacked and injured a resident. At a second hearing a few weeks later, the judge ordered the tenants to remove the dogs from the building. The tenants did not remove the dogs. The court adjourned another hearing to allow the sheriff to attend and remove the dogs. The matter was brought back to the court after the tenants were seen with dogs on the property again. The court terminated the tenants’ tenancy because of their flagrant breaches of the court’s orders. https://www.canlii.org/en/on/onsc/doc/2022/2022onsc1606/2022onsc1606.html

   

• The condominium brought an application against unit owners who had not complied with a fire inspection order for their unit. The court, on consent, ordered the owners to comply with the order. The condominium was awarded costs of $21,705.27 on a full indemnity basis. https://www.canlii.org/en/on/onsc/doc/2022/2022onsc2002/2022onsc2002.html

Mediation/Arbitration

The Superior Court of Justice continues to be critical of parties who start proceedings in the court instead of using mediation/arbitration where required by the Condominium Act, 1998. As stated by Justice Myers in Metropolitan Toronto Condominium Corporation No. 1171 v. Rebeiro, “The fix for neighbours’ disputes, whether in condominiums or houses, is not found in an expensive drawn out court proceeding. The court certainly can find facts and impose a remedy after an expensive trial perhaps. But, until the neighbours agree to cease hostilities, the court’s decision is just a battle in a ongoing war. It becomes fodder for the next salvo.”

Owners’ Meetings

During the pandemic, the Ontario government made temporary amendments to the Condominium Act, 1998, to allow condominiums to hold meetings of the owners using electronic or telephonic means even if the condominium did not have a by-law allowing such. The temporary amendments also allow for voting by electronic and telephonic means and the delivery of meeting materials electronically. The temporary amendments were recently extended to September 30, 2023. See this post from the CAO: https://www.condoauthorityontario.ca/news-media/extension-of-the-temporary-amendments-and-the-importance-of-an-electronic-meetings-and-voting-by-law/

Over the last year, many condominiums have passed by-laws to ensure they can continue to hold their meetings virtually in the future if the temporary amendments are not extended or made permanent. Some brave condominiums have even attempted to hold their meetings using a combination of in-person and virtual (hybrid). We have participated in a few of these. We highly recommend the use of advanced technologies and the assistance of a chair or moderator with familiarity with these hybrid meetings. Otherwise, you may end up with some owners unable to meaningfully participate in the meeting.

Weaponizing the Lien Right

The courts also continued to show concern with condominiums abusing the lien right or “weaponizing“ it against owners.  In one case, a condominium sought summary judgment on its lien enforcement action against an owner. The condominium claimed over $34,000 in costs in defending a Small Claims Court action by the owner and $50,000 in costs of the lien enforcement action. The dispute started with a chargeback for about $1,000 in plumbing and water bills, which the owner did not pay, and the condominium registered a lien. The interesting part is the owner paid to discharge the lien, but the condominium would not discharge it because she had commenced a Small Claims Court action against the manager. The court reviewed the Condominium Act, 1998, including subsection 85(7) which requires the condominium to discharge the lien upon payment of the amounts owing by the owner. The court was clearly concerned with the condominium’s conduct in this case:

1. As other courts have observed, s. 85 is vital to the functioning of condominiums in Ontario.   It gives condominium corporations the ability to collect each unit holder’s fair share of common expenses so that it can finance ongoing operations, and it protects innocent unit holders from having to pay a disproportionate share of costs resulting from the unreasonable conduct of any single owner.  These are important policy goals that inform the interpretation and application of s. 85.
2. The flip side of this is that s. 85 gives condominium corporations enormous leverage.  Pursuant to s. 85(6), a lien may be enforced in the same manner as a mortgage, over which it takes priority further to s. 86(1).  As a result, a unit holder who does not pay a lien may lose their home.  Pursuant to s. 85(3), the amount secured by a lien is always greater than the amount at issue at registration, because the lien covers the costs of discharge. No statutory requirement requires the corporation to keep a unit holder advised of the total amount secured on an ongoing basis once the lien is in place, or to prove that it has actually incurred the legal costs it claims.
3. In the circumstances of this case, the legitimate policy goals of s. 85 are not undermined by a determination that CCC No 56 was required to discharge the lien against Ms. Chreim’s unit after she paid all arrears demanded on January 29, 2019.  The Corporation could have safeguarded its interests, and those of other unit holders, by defending the Small Claims Court action in a reasonable and proportionate way, and then by registering a lien on the unit if Ms. Chreim did not pay a cost award. Ms. Chreim did not jeopardize the Corporation’s operation by withholding common expenses. She had the right to challenge the common expenses levied by the Corporation and an arguable basis to do so in the circumstances. The tens of thousands of dollars of legal costs incurred by CCC No 56 in the Small Claims Court action were not the result of unreasonable action on her part.  They flowed instead from the Corporation’s decision to weaponize the lien to attempt to get Ms. Chreim to abandon her lawsuit, and its decision to run up huge and unreasonable legal fees in defence of a modest claim, a point on which I will expand below.

    

    Final Thoughts

   We are seeing fewer court decisions related to condominiums, but that is good news for condominiums and owners given the significant costs, delays, and onerous procedures associated with the courts compared to the CAT and mediation/arbitration. In the coming years we may see even fewer as the CAT’s jurisdiction is expanded and people finally start to realize that mediation/arbitration is preferred to court in almost every case.

   Stay tuned for Part 2!