COURT OF APPEAL FOR ONTARIO
CITATION: Siemon v. Perth Standard Condominium Corporation, 2020 ONCA 503
DATE: 20200810
DOCKET: C67585
Strathy C.J.O., Lauwers and van Rensburg JJ.A.
BETWEEN
Laurie Siemon and Mary Siemon, Yanna McIntosh and
Yanna McIntosh as Litigation Guardian for Icil Morgan, Ralph Wagner,
Betty Mullin, Lorna Inman, Douglas Ahrens as Litigation Guardian for Mae
Ahrens, Allan Mielke, Debra Hemstock and Beverley Armstrong
Plaintiffs (Respondents)
and
Perth Standard Condominium Corporation No. 39, Cedarcroft 2
Facility Inc., Cedarcroft 2 Facility Limited Partnership and All
Seniors Care Living Centres Ltd.
Defendants (Appellants)
Gavin J. Tighe and Anna Husa, for the appellants
A. Paul Parlee, for the respondents
Heard: in writing, with limited submissions on June 5, 2020 by teleconference
On appeal of the judgment of Justice Pamela L. Hebner of the Superior Court of Justice, dated September 27, 2019, reported at 2019 ONSC 5576, and of the costs order dated January 10, 2020, reported at 2020 ONSC 187.
van Rensburg J.A.:
A. OVERVIEW
[1] This appeal arises out of a dispute between certain unit owners in Perth Standard Condominium Corporation No. 39 (“Condo 39”) that operates as a retirement residence known as McCarthy Place, and the appellants, which are related corporations that own, manage and rent out the majority (91 per cent) of the units in the building.
[2] The respondents are individuals who own one or more units in the building, several of which are rented out. The respondents brought an action alleging, among other things, that the appellants, in renting their units, had not complied with Condo 39’s Condominium Declaration (the “Declaration”) and By-laws (the “By-laws”) by failing to require their tenants to sign the standard Services Operation Agreement providing for certain monthly basic and optional fees for care and services. This practice has provided an advantage to the appellants in renting out their units, because they can offer discounts on services that the respondents are unable to offer.
[3] The respondents moved for summary judgment. The motion judge granted a declaration that the appellants had engaged in conduct towards the respondents that was unfairly prejudicial and unfairly disregarded their interests within the meaning of s. 135 of the Condominium Act, 1998, S.O. 1990, c. 19 (the “Condominium Act”). The judgment also requires the Declaration and By-laws to be enforced “such that all occupants of McCarthy Place shall be required to enter into the same services agreement with the services manager, separate and apart from the rental agreement.” She awarded the respondents partial indemnity costs of the action in the sum of $54,000 plus HST and disbursements.
[4] The appellants ask that the judgment be set aside and that the action be remitted to trial, or in the alternative, that this court grant summary judgment in their favour and dismiss the action entirely. They also seek an order setting aside the motion judge’s costs award.
[5] For the following reasons, while I would make a change to the judgment to ensure that it does not affect the rights of current occupants of McCarthy Place who were not before the court, I would otherwise dismiss the appeal and the costs appeal.
B. FACTS
[6] McCarthy Place is a 124-unit condominium building located in Stratford, Ontario. It is a retirement home as defined in s. 2 of the Retirement Homes Act, 2010, S.O. 2010, c. 11 (the “Retirement Homes Act”). The appellant Cedarcroft 2 Facility Inc. (“Cedarcroft”) acquired the original owner/developer’s 106 units in 2015 and has since acquired an additional seven units. The appellant Cedarcroft 2 Facility Limited Partnership (“Cedarcroft LP”) took over from the original Services Manager as the provider of food and other services to the retiree residents of McCarthy Place. The appellant All Seniors Care Living Centres Ltd. (“All Seniors”) is the board-appointed manager for Condo 39. Cedarcroft, Cedarcroft LP and All Seniors are related corporations with common ownership. Two of Condo 39’s three-person board of directors are employees of Cedarcroft LP and All Seniors.
[7] Cedarcroft rents out all of its 113 units. The remaining 11 units are owned by individuals. The respondents are the owners of eight of these units.
[8] The Declaration and By-laws require each unit owner, in addition to paying common expenses, to participate in a Services Program (consisting of “Standard Services” and “Optional Services”), and to enter into a Services Operation Agreement with the Services Manager in the form then in use by the Services Manager. An owner is not entitled to opt out of the Services Program or the fees to be paid for the program. No owner may convey or lease a unit unless the purchaser or lessee enters into the then current form of the Services Operation Agreement with the Services Manager.
[9] When the respondents purchased their units, they entered into identical Services Operation Agreements with the original owner/developer and Services Manager of McCarthy Place. Their Services Operation Agreements have remained in place without change since they acquired their units. The Services Operation Agreement, consistent with the By-laws, sets out the Services Program. The monthly fee was $500 plus $385 per additional occupant for the “Standard Services”, consisting of the use of amenities such as the indoor spa-wellness centre and a movie theatre, access to social, recreational and cultural programs, eight meals per month in the dining room and 24-hour emergency response. “Optional Services”, such as additional meal packages, housekeeping and personal care, were available on a user-pay basis for an additional fee set out in the Services Operation Agreement. Each unit occupant was required by the By‑laws to subscribe to a minimum level of “Optional Services” for a monthly fee of at least $125 per occupant. There have been annual increases in the service fees since Cedarcroft LP took over as Services Manager.
[10] The tenants of Cedarcroft’s units have not entered into Services Operation Agreements with the Services Manager. Rather, Cedarcroft requires its tenants to enter into a Residency Agreement that includes both rent and services. The Residency Agreement provides for a “Total Basic Fee” which is broken down between “Basic Rent”, “Primary Basic Care Services and Meals”, “Second Person Occupancy Fee” and “Secondary Person Basic Care Services and Meals”. Schedule “A” to the Residency Agreement, entitled “Included Facilities, Services and Meals”, sets out a list of “Residential Facilities” and a list of “Care Services and Meals”. Also attached is a “Care Package Agreement”, setting out fees for meals and various services, with applicable fees. Each Cedarcroft tenant receives a “Care Home Information Package” (“CHIP”), a form of disclosure that is required by the Retirement Homes Act. The CHIP sets out what is included in the “Accommodation Component” and a “Care and Service Component”, and, for each type of rental suite in the building, sets out the “maximum charges” for each of the two components. A “Schedule of Additional Services” is included in the CHIP, which corresponds with the “Care Package Agreement” attached to the Residency Agreement.
[11] The respondents commenced an action in April 2017. They claimed, among other things, that the appellants were enforcing certain provisions of the By-laws in a discriminatory manner, specifically by requiring them to pay a higher monthly service fee than the Cedarcroft tenants were required to pay.
[12] The respondents sought various forms of relief, including: (1) a mandatory injunction requiring an accounting for all service fees paid under their Services Operation Agreements and the fees due and owing by all owners, tenants and occupants of each condominium unit but not paid; (2) a mandatory injunction requiring the owner of any unit to pay all service fees determined to be due and owing but unpaid; (3) a declaration that the appellants had enforced the By-laws in a discriminatory manner against only some of the unit owners while exempting others, which conduct was oppressive; and (4) a declaration that any sale, transfer or assignment of any condominium unit without the transferee having entered into a Services Operation Agreement be deemed null and void.
[13] In the course of the proceedings, the respondents brought a motion (which was opposed by the appellants) for production of all of the Residency Agreements between Cedarcroft and each of its tenants. Raikes J. determined that the existence and terms of the agreements were at the core of the respondents’ claims. To this point, he stated: “How can the plaintiffs ensure that residents of [Cedarcroft] units are not given service expense holidays or discounted rates as inducements to rent a [Cedarcroft] unit?” His endorsement, dated October 24, 2017, ordered production of the Residency Agreements, with measures to protect the privacy of the individual tenants.
[14] The respondents’ counsel provided an affidavit (the “Vandersleen Affidavit”) attaching a spreadsheet that anonymized and summarized the charges shown in the Residency Agreements. Ms. Vandersleen stated that the summary of charges showed that the tenants of 49 of the Cedarcroft units paid either nothing or less than “the minimum fee of $870” for “primary care and meals”, and that Cedarcroft had waived or did not charge the second person occupancy fee for 21 units where more than one tenant occupied the unit.
[15] Ms. Vohra, the Vice-President of Finance for All Seniors, filed a responding affidavit in which she stated that Ms. Vandersleen appears to have equated a strike-through in “Primary Basic Care Services and Meals” in certain Residency Agreements with no charge being levied on the tenants of those units for standard services. She stated that “Basic Rent” in the Residency Agreements includes an accommodation fee and a fee for standard services such as access to all amenity spaces and 24-hour emergency response, consistent with the list of standard services received by the Plaintiffs, while “Primary Basic Care Services and Meals” is similar to the “Optional Services” in the Services Operation Agreement. She also stated that the $870 amount referred to in the CHIP schedule reflects a maximum charge for the “Care and Service Component” (not a minimum charge), and that the second-person occupancy fee had been waived only in respect of ten units.
[16] The respondents moved for summary judgment in December 2018. Their notice of motion sought the following relief:
A mandatory injunction requiring the Defendants to account for all service fees actually paid under the Services Operation Agreement and fees that were due and owing by all owners, tenants and occupants of each condominium unit but not paid.
A mandatory injunction requiring the owner of any paid unit to pay all service fees determined to be due and owing but unpaid.
Damages arising from the Defendants enforcing the Condominium By-laws in a discriminatory manner against only some of the owners of the units (including the Plaintiffs) while exempting other owners including Cedarcroft Facility Inc., which conduct was oppressive.
Damages arising from:
i. the two members of the Board of Directors of the Condominium Corporation having a conflict of interest; and
ii. their failure to comply with section 40 of the Condominium Act.
Punitive and exemplary damages against all Defendants in the sum of $100,000.
Costs against the Defendants in favour of the Plaintiffs on a full indemnification basis.
Such further and other relief as the Honourable Court deems just.
C. THE MOTION JUDGE’S REASONS
[17] The thrust of the respondents’ argument on the summary judgment motion was that the appellants’ failure to require the Cedarcroft tenants to enter into a Services Operation Agreement, contrary to the Declaration and By-laws, created an uneven playing field between the unit owners, which gave the appellants an unfair marketing advantage in renting out their units. The motion judge set out the nub of the respondents’ concern at para. 23 of her reasons:
The plaintiffs assert that the defendants are applying different rules to the plaintiffs than to their own tenants. The defendants are charging the plaintiffs a certain amount for services, as set out in the services agreement and the bylaws, whereas many of the tenants renting from Cedarcroft are charged something less. The plaintiffs assert that these actions put the plaintiffs on a different playing field when they try to rent their units. The plaintiffs assert that they are unable to remedy the problem internally as the defendants ensure that two of the three directors on the board of directors are designates of the defendants. The plaintiffs assert that the defendants have acted oppressively or unfairly such that s. 135 ought to be used to make the appropriate order.
[18] Although the appellants had pleaded in their statement of defence that each of the Cedarcroft tenants was subject to a Services Operation Agreement, and therefore that they had complied with the Declaration and By-laws, their argument on the summary judgment motion, as summarized at paras. 24 to 26 of the motion judge’s reasons, was that: (1) there was no oppression because the respondents were paying the same price for services as they were five years ago with the original Services Manager (with the exception of annual increases) and there was no evidence the respondents were not receiving the services they pay for; (2) nothing prevented two members of the board of directors from being nominees of the appellant corporations, or from having effective control of the board as majority shareholders; and (3) the respondents failed to prove bad faith. They also argued that “technical” non-compliance with the Declaration and By-laws did not amount to unfair treatment or oppression.
[19] The motion judge noted that it was apparent, from a comparison of the information in the spreadsheet attached to the Vandersleen Affidavit, the blank Cedarcroft Residency Agreement and the CHIP, that “Cedarcroft has provided incentives in order to attract tenants for its units by not charging the care and service component or by reducing the charge substantially”: at para. 19. At para. 21, she stated:
What is clear, then, is that Cedarcroft does not require its tenants to enter into the same, or a comparable, services agreement that the plaintiffs were required to enter into. In doing so, Cedarcroft has not complied with the condominium declaration and bylaws. Cedarcroft is able to manipulate the services fee because it, the manager of condo 39 and the services provider are all related corporations with a common ownership.
[20] The motion judge declared that the appellants had engaged in conduct that is unfairly prejudicial to the respondents and unfairly disregards the respondents’ interests within the meaning of s. 135 of the Condominium Act by essentially failing to ensure that all occupants are charged the same amount for services. Her conclusion is stated at para. 37:
In my view, the plaintiffs reasonably expected that all occupants of McCarthy Place would be treated equally and charged the same amount for services. The defendants have not complied with the declaration and bylaw. They have not ensured that all occupants be treated equally. They have not ensured that all occupants are charged the same amount for services. In doing so, the defendants have received an unfair advantage in renting their units, in that they have been able to offer incentives not available to the plaintiffs.
[21] Accordingly, the motion judge ordered that “all occupants of McCarthy Place shall be required to enter into the same services agreement with the services manager, separate and apart from the rental agreement”. She was of the view that this was the “least intrusive remedy”. She declined, however, to make any order respecting the makeup of the board of directors or the choice of Services Manager, and she dismissed the claim for damages, after concluding that there was no proof of a specific loss: at paras. 40-45.
[22] In a separate decision, after receiving written submissions from the parties, the motion judge awarded costs of the action to the respondents in the sum of $54,000 plus HST and $13,395.14 in disbursements.
D. ISSUES
[23] The appellants submit that the motion judge made a number of errors, in:
granting relief that was different from the relief the respondents sought in their statement of claim and notice of motion;
failing to deal with a number of issues in the litigation, thereby granting what amounted to partial summary judgment;
concluding that the appellants’ conduct was unfairly prejudicial and unfairly disregarded the respondents’ interests;
granting relief against persons who were not before the court; and
awarding costs against the appellants, when some of the issues were decided in their favour and other issues were abandoned.
E. DISCUSSION
(1) The motion judge did not err in granting relief that was different from the relief sought by the respondents
[24] The appellants assert that the motion judge erred in granting relief other than what was claimed by the respondents in their notice of motion and statement of claim.
[25] First, they assert that the statement of claim does not specifically plead s. 135 of the Condominium Act or the provisions of the Retirement Homes Act. As such, the motion judge ought not to have granted relief under s. 135 or considered the provisions of the Retirement Homes Act in arriving at her decision.
[26] There is no merit to this argument. It is only when a statutory provision would take the opposing party by surprise that it must be specifically pleaded before it can be relied on: Ontario Hydro-Electric Power Commission of Ontario v. City of St. Catharines et al. (1971), 1971 CanLII 346 (ON SC), 21 D.L.R. (3d) 410 (Ont. H.C.), at pp. 417-19, aff’d on other grounds 1971 CanLII 696 (ON CA), [1972] 1 O.R. 806 (C.A.), aff’d (1973) 1973 CanLII 1299 (SCC), 36 D.L.R. (3d) 160 (S.C.C.).
[27] Here, the statement of claim clearly advanced a claim for oppressive conduct, even though it did not expressly plead s. 135 of the Condominium Act. The respondents sought a declaration that the appellants enforced the By-laws in a discriminatory manner against only some unit owners, including the appellants, while exempting other owners, including Cedarcroft, which conduct was oppressive. In their statement of defence, the appellants joined issue on whether they had allowed the Declaration and By-laws to be applied in a discriminatory manner, whether they enforced the Services Operation Agreement only against the respondents, and whether this constituted oppressive conduct.
[28] As for the provisions of the Retirement Homes Act, there is no question that McCarthy Place, as a retirement home, operates under that legislation and is subject to the requirement that a CHIP be provided to retirement home residents which clearly sets out an itemized list of the different types of accommodation and care services provided in the retirement home and their prices: see s. 54(k). This statute was therefore relevant to the context underlying the respondents’ claim and was properly considered by the motion judge.
[29] Second, the appellants contend that “[t]he relief granted was not the case the Respondents brought or the Appellants could have expected to meet on the Motion”, and that, as in Rodaro v. Royal Bank of Canada (2002), 2002 CanLII 41834 (ON CA), 59 O.R. (3d) 74 (C.A.), this court should allow the appeal on that basis.
[30] I disagree. The reliance on Rodaro is misplaced. The motion judge did not step outside of the pleadings or the case developed by the parties to find liability, as was the case in Rodaro: see Rodaro, at para. 61. As I have already observed, the issue that the motion judge determined was joined in the parties’ pleadings. The wrong alleged – the appellants’ failure to comply with the Declaration and By‑laws by not requiring the Cedarcroft tenants to enter into the prescribed form of Services Operation Agreement – was always at the heart of the proceeding.
[31] As the motion judge observed at para. 17 of her costs decision, the respondents brought a motion requesting the production of the Residency Agreements, in the course of which it was clear that “the primary issue was the difference in treatment between the tenants of the defendants and the plaintiffs with respect to required services”. She stated: “In my view, the defendants were aware that was the primary issue throughout. Certainly, over time, the failure to treat all occupants equally in the payment for services became the predominant issue”: at para. 17.
[32] The arguments the appellants advance on this issue are premised on a concern for procedural fairness. However, this concern is unfounded: the appellants were not taken by surprise by the issues raised on the motion, how they were determined, or the relief that was granted. All were squarely raised and addressed in the motion. While the notice of motion requested relief that was broader than what was granted, the motion judge had “broad remedial power to make any order [she] deem[ed] proper upon a finding that the conduct complained of [was] oppressive”: Walia Properties Ltd. v. York Condominium Corporation No. 478 (2007), 60 R.P.R. (4th) 203 (Ont. S.C.), at para. 31, rev’d in part 2008 ONCA 461, 67 R.P.R. (4th) 161. See also Noguera v. Condominium Corporation No. 22, 2020 ONCA 46, 10 R.P.R. (6th) 1, at paras. 18, 21. Ultimately, the declaratory relief granted by the motion judge, and the order requiring enforcement of the Declaration and By-laws with respect to the services agreement for all occupants of McCarthy Place was, as in Walia, the “least intrusive” remedy.
[33] Accordingly, I would not give effect to this ground of appeal.
(2) The motion judge granted judgment in full, not partial summary judgment
[34] The appellants’ second argument is that, because the motion judge did not address a number of issues pleaded in their statement of claim and raised in the notice of motion, there is “considerable doubt about the status of the action and the issues that remain, if any, to be litigated between the parties”. They contend that the motion judge erred in effectively granting partial summary judgment.
[35] The appellants point to various claims raised in the statement of claim that were not determined by the motion judge and were not expressly abandoned. For example, the respondents sought an order deeming By-laws 1 and 2 void ab initio, an accounting of fees due and owing and not received, and a declaration that any transfer of a unit without the transferee having entered into a Services Operation Agreement be deemed null and void. The respondents also asserted that the 15 per cent “finders’ fee” for assisting with renting their units was unfair and oppressive. The appellants contend that the motion judge’s reasons were deficient because they did not dispose of or address these claims
[36] This argument can be addressed briefly.
[37] The respondents’ claims and the relief they were seeking became more focused as the litigation progressed. By the time they moved for summary judgment, the Residency Agreements had been produced, enabling the respondents to confirm that the Cedarcroft tenants were, in certain cases, paying less in service fees than required under the Services Operation Agreement. There was also evidence to satisfy the respondents that they were paying their proportionate share of the cost of services, and not subsidizing the Cedarcroft unit owners. Armed with this evidence (which they did not have at the commencement of the action), the respondents reasonably decided to pursue some claims and not to pursue others when they brought their summary judgment motion.
[38] Contrary to the appellants’ argument, the respondents expressly abandoned their claims for other relief claimed in the statement of claim at the hearing of the summary judgment motion. This was made plain in the following exchange between the motion judge and the respondents’ counsel at the outset of his submissions:
Mr. Parlee: I am aware of the Ontario Court of Appeal decisions and the Superior Court decisions that motions for partial summary judgment leaving some issues unresolved, or undetermined should be avoided and therefore, on behalf of the plaintiffs, I am limiting the issues to be decided by Your Honour to the plaintiffs’ claims based on conflict of interest by the defendants, breaches of the Condominium Corporation’s Declaration by the defendants.
The Court: What are you leaving for trial then?
Mr. Parlee: Nothing. Those are it. What I am saying is, I don’t want your Honour to say, “well all these matters should go to trial because these are unresolved issues.” Those are the issues. Nothing else will be proceeded with.
Mr. Parlee: I submit that all of the limited issues, which are the subject matter of this hearing, are the proper subject matter of a summary judgment motion with no other issues being left to be determined. The ones indicated, Your Honour, are the only ones on the basis of which relief is being sought.
[39] There is no uncertainty regarding the status of the balance of the claims. The motion judge’s judgment specifically dismissed the balance of the relief sought by the respondents on the motion. The motion judge awarded costs for the summary judgment motion and the action. This was not a case of partial summary judgment and the motion judge’s reasons were not deficient.
[40] To the extent that the appellants require an order dismissing the balance of the respondent’s claims in the action, the respondents have confirmed that they were and remain prepared to consent to such an order.
[41] This ground of appeal therefore fails.
(3) The motion judge did not err in concluding that the appellants’ conduct was unfairly prejudicial and unfairly disregarded the respondents’ interests
[42] The appellants’ third argument is that the motion judge erred in finding conduct justifying a remedy under s. 135 of the Condominium Act. First, they assert that the motion judge misapprehended the evidence about what services are provided to and paid for by the Cedarcroft tenants relative to those of the respondent unit owners. Second, they take issue with the conclusion that their conduct was unfairly prejudicial and unfairly disregarded the respondents’ interests.
(a) The alleged misapprehension of evidence
[43] On the first point, the appellants submit that the motion judge’s conclusion, at para. 21, that Cedarcroft failed to require its tenants to enter into “the same or a comparable services agreement that the Plaintiffs were required to enter into”, was based on a misapprehension of the evidence. They submit that, contrary to the motion judge’s finding, the respondent unit owners and the Cedarcroft tenants pay for and receive the same or similar services. The appellants also contend that any discounts provided to the Cedarcroft tenants were only in respect of rent, not service fees.
[44] Essentially, the appellants assert that the motion judge misunderstood the evidence because she did not accept their argument about how the Cedarcroft tenants receive and pay for services. Simply put, their position was and is as follows: while the Cedarcroft tenants do not sign a Services Operation Agreement, they pay the same amount as the respondents for the same services. The fact that their Residency Agreement may show them paying nothing (or a reduced amount) under “Primary Basic Care Services and Meals” does not mean that they are receiving “Standard Services” without charge. Rather, the term “Primary Basic Care Services and Meals” corresponds with “Optional Services” under the Services Operation Agreement, such that these Cedarcroft tenants are not paying for or receiving “Optional Services”. The Cedarcroft tenants pay for their “Standard Services” as part of their “Basic Rent”, which is a blended amount. Although “Basic Rent” is not defined, the appellants point to the CHIP disclosure which lists “24 Hour Security and Emergency Response” and “Access to All Amenity Space” as part of the “Accommodation Component”. The appellants contend that the motion judge must have equated no amount or a small amount being charged to a Cedarcroft tenant for “Primary Basic Care Services and Meals” in a Residency Agreement to that tenant receiving “Standard Services” for little or no charge.
[45] I am not persuaded that the motion judge misapprehended the evidence. Even if it is accepted that the Cedarcroft tenants pay for their “Standard Services” as part of their “Basic Rent”, it is a blended amount. The evidence was clear that some Cedarcroft tenants were offered discounts and incentives in the form of a reduced amount for “Basic Rent”. Although the appellants’ position is that only the actual “rent” portion was discounted, and that there was no discount for services, there was no clear evidence before the motion judge that demonstrated this was the case. Under cross-examination, although Ms. Vohra confirmed that all tenants have access to and use the basic services, she was unable to say what minimum service fees were paid by the Cedarcroft tenants, because the service fee is never set out. Without evidence of the apportionment between rent and service fees it is impossible to conclude that the discounts the appellants admitted they were providing to their tenants applied only to rent, and not to services. It was reasonable for the judge to conclude, based on the evidence, that the appellants were charging a discounted or no amount for some services provided to the Cedarcroft tenants.
[46] Even if the motion judge misapprehended the evidence in the way the appellants suggest, or put another way, even if the motion judge ought to have accepted their contention that the Cedarcroft tenants were paying for Standard Services as part of their “Basic Rent”, her conclusions, at para. 21 of her reasons, that “Cedarcroft does not require its tenants to enter into the same, or a comparable, services agreement that the plaintiffs were required to enter into” and that “[i]n doing so, Cedarcroft has not complied with the condominium declaration and bylaws,” are unimpeachable.
[47] There is no question that the Cedarcroft tenants were not required to enter into the standard Services Operation Agreement anticipated by the Declaration and By-laws, or an agreement that was the same as or comparable to the Services Operation Agreement. Cedarcroft’s tenants were offered discounts or promotional pricing. In her cross-examination, Ms. Vohra confirmed that “as service managers, we have the option of offering discounts, promotions, whatever the case may be” and that “any discounts or losses that we are incurring from [those discounts and promotions] is our cost to bear as service manager.” Although the appellants asserted there was no discount to the fee for “Standard Services”, it was conceded that in at least ten cases, Cedarcroft tenants were not charged a second person occupancy fee (a charge of $385 per month under the Services Operation Agreement). And, even if the appellants’ interpretation is accepted, Cedarcroft’s tenants were not obliged to subscribe to a monthly minimum of $125 per occupant in “Optional Services”. These are mandatory charges under the By-laws and the Services Operation Agreement.
[48] Finally, the Declaration and By-laws contemplate that all residents will have access to the same services and will be paying the same rates for those services. The appellants’ use of a Residency Agreement that does not set out the Services Program in a manner consistent with the Declaration and By-laws, together with the common ownership of Cedarcroft, the Service Manager and the services provider enabled the appellants, in the words of the motion judge, to “manipulate the services fee”. The current arrangements lack transparency and provide no assurance to the residents of McCarthy Place that they are all in fact paying the same rates for the services they receive.
[49] Accordingly, whether or not the motion judge misapprehended the evidence with respect to what services may have been included in the Cedarcroft tenants’ “Basic Rent”, her overall conclusions were soundly based on the evidence before her.
(b) The finding of unfair prejudice and unfair disregard
[50] The appellants contend that the motion judge erred in concluding that their conduct was unfairly prejudicial to the respondents and unfairly disregarded their interests. They assert that there was no evidence that the respondents were subsidizing the services received by the Cedarcroft tenants, and that, once the motion judge concluded that the respondents were not entitled to damages, it followed that there was no oppression. Moreover, they submit that in concluding that the appellants were acting unfairly by not requiring the Cedarcroft tenants to enter into a Services Operation Agreement, the motion judge ignored the evidence that the respondents do not require their own tenants to do so.
[51] An oppression remedy is provided for in s. 135 of the Condominium Act as follows:
- (1) An owner, a corporation, a declarant or a mortgagee of a unit may make an application to the Superior Court of Justice for an order under this section.
(2) On an application, if the court determines that the conduct of an owner, a corporation, a declarant or a mortgagee of a unit is or threatens to be oppressive or unfairly prejudicial to the applicant or unfairly disregards the interests of the applicant, it may make an order to rectify the matter.
(3) On an application, the judge may make any order the judge deems proper including,
(a) an order prohibiting the conduct referred to in the application; and
(b) an order requiring the payment of compensation.
[52] The motion judge properly identified the relevant principles for oppression under s. 135 of the Condominium Act, referring to the case cited by the appellants as authoritative, Walia. She also considered and applied the framework for the oppression remedy set out in BCE Inc. v. 1976 Debentureholders, 2008 SCC 69, [2008] 3 S.C.R. 560.
[53] In Walia, Harvison Young J. (as she then was), observed that unfair prejudice has been described as “a limitation on or injury to a complainant’s rights or interests that is unfair or inequitable” and that unfair disregard has been described as “unjustly ignor[ing] or treat[ing] the interests of the complainant as being of no importance”: at para. 23. She also noted that s. 135 is meant to protect the reasonable expectations of shareholders and unit owners: at para. 24. On the facts in Walia, Harvison Young J. concluded that the failure to use the weighted voting procedures set out in a condominium corporation’s by-laws and the removal of commercial unit owners from the board of directors was unfairly prejudicial to and unfairly disregarded the interests of such owners. The condominium declaration contemplated a relatively level playing field between commercial and residential owners. The change in the weighted vote, along with the removal of the commercial owners from the board, eliminated an important part of the balance. Her remedy called for the by-laws to be enforced, as this was the “least intrusive and most appropriate remedy in the circumstances”: at para. 31.
[54] After considering the relevant legal principles and the approach taken in Walia, the motion judge found, at para. 36 of her reasons, that the Declaration and By-laws contemplated that all occupants of McCarthy Place are to be treated equally, that they are required to have the same services agreement with the Services Manager, and that they are to pay the same amount for required services. Based on these findings, she concluded that the respondents “reasonably expected that all occupants of McCarthy Place would be treated equally and charged the same amount for services”, and that by not ensuring that all occupants be charged the same amount for their services, the appellants “have received an unfair advantage in renting out their units, in that they have been able to offer incentives not available to the plaintiffs”: at para. 37.
[55] This was the basis for the finding of unfairness. Simply put, as in Walia, the failure to comply with the Declaration and By-laws had resulted in unfairness: while the respondents, in renting their units, were bound by the terms of the Services Operation Agreement, Cedarcroft’s tenants signed alternative Residency Agreements that enabled the appellants to manipulate the fees, and to obtain an advantage not available to the respondents in renting out their units.
[56] The fact that the motion judge, in considering the appropriate remedy, did not award damages does not undermine her finding that the appellants’ failure to comply with the Declaration and By-laws was unfairly prejudicial to the respondents and unfairly disregarded their interests. The remedy she fashioned was intended to address the unfairness that she found, and to level the playing field between the parties on a prospective basis by requiring compliance with the Declaration and By-laws. While the motion judge declined to award damages for past contraventions in the absence of any proof of a specific loss, her remedy upholds the respondents’ rights as unit owners and provides an appropriate remedy to prevent ongoing harm to their interests.
[57] Finally, I reject the appellants’ argument that they did not treat the respondents unequally because five of the respondents who were landlords in their own right did not require their tenants to sign a separate Services Operation Agreement with the Services Manager, and that the motion judge ignored this fact in arriving at her decision. This was addressed in oral argument on the motion and raised again in the appellants’ costs submissions. At para. 15 of the costs decision, the motion judge noted that the respondents were following the direction of the appellants in not having their tenants sign their own Services Operation Agreements, referring to the evidence of one of the respondents to that effect.
[58] For these reasons, this ground of appeal cannot succeed.
(4) The judgment can be amended to address the concern that it affects the rights of persons who were not before the court
[59] The judgment requires that the Declaration and By-laws shall be enforced “such that all occupants of McCarthy Place shall be required to enter into the same services agreement with the services manager, separate and apart from the rental agreement”. The appellants assert that the motion judge erred in granting relief against persons who were not parties to the action and were not before her at the motion. The appellants also contend that, because the judgment does not prescribe a particular form of “services agreement”, it is uncertain and performance of the judgment is impossible.
[60] Although this appeal was heard in writing (with additional written submissions filed by the parties), the panel requested oral submissions by teleconference on this issue.
[61] It is important to note that the prospect that the rights of parties not before the court would be affected was specifically raised by the motion judge. She asked the respondents’ counsel how she could grant an order remedying the contract between the appellants and the Cedarcroft tenants, when the other residents were not parties. The respondents’ counsel made it clear that he was only seeking a prospective remedy. He stated:
Your Honour can’t retrospectively fix this situation. It’s prospective. And I suggest the purpose of the oppression remedy is to make sure the conduct does not continue into the future. So, any future agreement. These will presumably expire at some time, each one. Any future agreement should contain those terms. I’m not for a second suggesting Your Honour could go back and retroactively impose that term on the existing agreements. That would be unreasonable.
[62] The relief that was ultimately granted by the motion judge did not make it clear that the appellants would be required to ensure that all occupants of McCarthy Place would enter into the same services agreement with the services manager, separate and apart from the rental agreement, only on a go-forward basis.
[63] I agree that this provision of the judgment is problematic because it could be interpreted as affecting the interests of persons that were not before the court, that is, the tenants of both the appellants and the respondents who have existing agreements in respect of the services they receive and the fees they are required to pay. In the course of their oral submissions before this court, the parties proposed changes to the wording of para. 2 of the judgment to meet this concern.
[64] As for the form and content of the services agreement, the appellants’ counsel confirmed that, if the appeal were otherwise dismissed, the intention was to promulgate within six weeks a new services agreement, separate and apart from its residency agreement, that would be used for all future residents. The respondents’ counsel acknowledged that the appellants are entitled to promulgate new and different services agreements (that is, it is not essential that the same form of Services Operation Agreement be used for all residents), provided that the services and fees set out in such agreements are consistent with the By-laws and the services and fees they and their tenants are required to pay.
[65] The terms of the judgment must be changed to ensure that the existing rights of persons not before the court, including the current Cedarcroft tenants, are not affected, while ensuring that all future residents are provided with the same services at the same rates that the respondents receive and are required to pay for. To this end, I would amend and replace para. 2 of the judgment by the following:
THIS COURT DECLARES AND ADJUDGES that the Declaration and By-Laws of Perth Standard Condominium Corporation No. 39 shall be enforced such that (a) on the expiry of any existing agreement with a current occupant of McCarthy Place and (b) on the execution of any agreement with a future occupant of McCarthy Place, the occupant shall be required to enter into a services agreement with the services manager, separate and apart from any rental agreement, that provides for the same services that are available to the respondents as unit owners of McCarthy Place, and at the same rates.
(5) There is no reversible error in the motion judge’s costs decision
[66] The motion judge awarded costs of the action, including the summary judgment motion, fixed at $54,000 plus HST and $13,395.14 in disbursements, payable by the appellants other than Condo 39. She denied the respondents’ claim for substantial indemnity costs and reduced their partial indemnity claim by approximately $20,000 for time spent on unsuccessful claims. She set off against the amount of $60,000 the sum of $6,000 that she awarded to the appellants for costs thrown away as a result of an adjournment of the summary judgment motion, and for time spent arguing about the respondents’ unsuccessful attempt to rely on affidavits of documents as part of the evidentiary record.
[67] The appellants contend that the motion judge erred in awarding costs to the respondents because success on the motion was divided and almost half of the hearing time was spent on an issue that the respondents lost completely (the admissibility of the affidavits of documents). They submit that the respondents achieved minimal success on the issues argued on the balance of the hearing and that they were forced to respond to issues that were abandoned. In their view, no costs should have been awarded.
[68] A costs order should only be interfered with on appeal if the judge below erred in principle or if the costs award is plainly wrong: Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303, at para. 27. There was no such error here.
[69] The motion judge concluded that the respondents were successful on the primary issue before the court and were thus presumptively entitled to costs. She rejected the appellants’ attempt to characterize their conduct as a “technical lack of adherence to the wording of the condo Declaration”. Rather, at para. 14, she described their conduct as a “stubborn and persistent lack of adherence” to the wording of the Declaration and a stubborn refusal to acknowledge that the practice they were engaging in was unfair. The motion judge rejected the argument that the respondents’ claim was a “moving target”, and she concluded that there was no conduct on their part to disentitle them from costs. I see no basis to interfere with these findings and conclusions.
[70] The motion judge took into consideration the fact that the respondents spent time in the action on claims that were not successful, when she reduced the respondents’ costs by $20,000. She also considered the appellants’ claim for costs of two steps in the litigation: the adjournment of the summary judgment motion and the respondents’ attempt, in the course of the hearing of the motion, to rely on affidavits of documents (which entailed argument and resulted in a ruling against them). She awarded the appellants $6,000 for these two steps (including almost the entire amount they sought in respect of the ruling concerning the admissibility of the affidavits of documents).
[71] The appellants continue to characterize their wrongdoing as an “administrative failure”, understating the implications and importance of the relief obtained by the respondents. The respondents were successful in the litigation. They established that the appellants’ conduct was unfairly prejudicial and unfairly disregarded their interests, and that they were entitled to a remedy under s. 135 of the Condominium Act. The relief granted by the motion judge means that the appellants must cease their non-compliance with the Declaration and By-laws and can no longer use their positions as the owner of the majority of units in McCarthy Place and as Service Manager to unfairly prejudice the individual unit owners who wish to rent out their units. In this way, as the motion judge pointed out, the respondents were successful on the primary issue before her and were thus entitled to costs.
[72] I see no reason to interfere with the costs order in this case. The order was proportionate and reasonable and reflects no error in principle.
F. DISPOSITION
[73] For these reasons, I would vary the judgment as set out above, but would otherwise dismiss the appeal. I would dismiss the costs appeal. I would order costs of the appeal to the respondents in the agreed amount of $35,000, inclusive of HST and disbursements, payable by the appellants other than Condo 39.
Released: August 10, 2020 (“G.R.S.”)
“K. van Rensburg J.A.”
“I agree. G.R. Strathy C.J.O.”
“I agree. P. Lauwers J.A.”