Court File and Parties
COURT FILE NO.: 17-2826 DATE: 20171214 CORRECTED RELEASED: 20171215 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Nuala Donly Freund, Applicant AND: Toronto Standard Corporation No. 1703, Respondent
BEFORE: The Honourable Justice J. A. Desotti
COUNSEL: K. Boersma Counsel, for the Applicant M. Arnold Counsel, for the Respondent
HEARD: November 15, 2017
Endorsement
A. The Application
1The application is brought under section 119 and 135 of the Condominium Act, 1998 S. O. 1998, c. 19 and is dated May 26th, 2017. The sections read as follows:
Compliance with Act
119 (1) A corporation, the directors, officers and employees of a corporation, a declarant, the lessor of a leasehold condominium corporation, an owner, an occupier of a unit and a person having an encumbrance against a unit and its appurtenant common interest shall comply with this Act, the declaration, the by-laws and the rules. 1998, c. 19, s. 119 (1).
Responsibility for occupier
(2) An owner shall take all reasonable steps to ensure that an occupier of the owner’s unit and all invitees, agents and employees of the owner or occupier comply with this Act, the declaration, the by-laws and the rules. 1998, c. 19, s. 119 (2).
Enforcing compliance
(3) A corporation, an owner and every person having a registered mortgage against a unit and its appurtenant common interest have the right to require that a person who is required to comply with this Act, the declaration, the by-laws and the rules shall do so. 2015, c. 28, Sched. 1, s. 103.
Proposed unit
(4) Until the declarant registers a declaration and description and the by-laws and rules of the corporation come into force, an occupier of a proposed unit shall comply with this Act, the declaration and the by-laws and rules proposed by the declarant; the declarant shall take all reasonable steps to ensure that the occupier complies with this section. 1998, c. 19, s. 119 (4).
Right against occupier
(5) Until the declarant registers a declaration and description and the by-laws and rules of the corporation come into force, an occupier of a proposed unit has the right to require the occupiers of the other units in the proposed corporation to comply with this Act, the declaration and the by-laws and rules proposed by the declarant. 1998, c. 19, s. 119 (5).
Oppression remedy
135 (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. 1998, c. 19, s. 135 (1); 2000, c. 26, Sched. B, s. 7 (7).
Grounds for order
(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. 1998, c. 19, s. 135 (2).
Contents of order
(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. 1998, c. 19, s. 135 (3).
2The conduct described in the application under section 135 indicated that the respondent had been threatening, oppressive, unfairly prejudicial or disregarded the interest of the applicant. The applicant under section 119 seeks a declaration that the respondent failed to ensure compliance with his declaration.
3The respondent corporation presents significant and meaningful answers to this application. It asserts the following:
a) The applicant does not have standing to bring this application because she sold her unit before she brought this application and as such is not an owner within the definition of the Condominium Act;
b) None of the conduct of the condominium corporation amounted to oppressive, prejudicial, or unfairly disregarded the interest of the applicant;
c) The claim made is beyond the two year limitation period under the Limitation Act;
d) The issues raised in the application are either res judicata or the matter cannot proceed under the doctrine of issue estoppel or cause of action estoppel;
e) The application is an abuse of process;
f) The condominium declaration is not a contract and thus any breach does not reflect a cause of action;
g) There has been a full and final release of the directors and the corporation;
h) There has been no evidence adduced in the application of any bad faith or misrepresentation.
B. The Facts
4The applicant owned unit 2905 in TSCC. These units were residential units that could be used as long-term residences, or optionally by participating in a pool that functioned as a hotel operating as One King West Hotel (the “Hotel Pool”). Participating owners entered into a Rental Management Agreement (“RMA”) with a wholly owned subsidiary of TSCC 1703 that managed the hotel business, Events at One King West Ltd. (“Hotel Management”)
5The applicant was a participating owner in the Hotel Pool and was earning an average monthly profit of $1,700.00. Her unit was described by the arbitrator as one of the luxury hotel suites.
6In 2013, plans were finalized for a substantial change to the units in the Hotel Pool. These units were known to be subject to periodic renewals. Some of the renovations the applicant believed would impact negatively on her long-term residence usage. Also some of the renovations the applicant believed failed to address some other issues such as repairs to plumbing and electrical systems. Nevertheless, out of the 330 units that were involved in this Hotel Pool (out of 575 units), the applicant was the only party who did not agree to the renovations.
7The interests of the Participating Suite Owners (PSOs) are represented by a company called King-Yonge Suite’s Inc. or KYS and major decisions regarding the Hotel Pool Units required the involvement and approval of all three Board of Directors.
8The objection went to arbitration but the arbitrator held against the applicants on December 19th, 2014. I would note, as also indicated by counsel for the applicant, that the arbitration only named the respondent as Events At One King West Ltd. and not the present respondent, Toronto Standard Corporation No, 1703.
9Arbitrator Gary M. Caplan indicated, that the present applicant through her common law spouse, Robert Verdun “stridently” objected to the renovations and the costs occasioned by same and lobbied against it.
10I would note the following paragraphs from the arbitrator’s decision as noteworthy as follows:
25In my respectful view, the claimant falls into error by interpreting the RMA in a narrow and technical way with no regard to the other provisions of the RMA and the Declaration. Article 2.1(a) refers to the “same standard” and “same general condition” of the unit and its contents when it was first transferred in 2006. The reference to the “standard” in the RMA refers to the quality of the amenities, furnishings, and the equipment in the unit. There is no dispute that it was the common intention of the declarant and the PSOs to maintain a “luxury standard” for the HPUS.
26The reference to the “genera condition” in the RMA refers to the state of repair and maintenance of the unit and its contents. Luxury amenities, furnishings, equipment and contents, indeed even the unit itself, may be of a luxury standard but, over time, may fall into a poor or deteriorated condition. Article 2.1(a) of the RMA, in the context of the maintenance and disbursement of monies out of the CERF, requires the respondent to maintain a luxury standard of quality and to ensure that its condition remains so.
27It follows that Article 2.1(a) cannot be read to mean that the configuration and contents of units are locked or frozen in time to what was present in the units in 2006. Design, configurations and fashions by their very nature change from time to time. Amenities, furniture, furnishings, even of the highest quality will deteriorate and fall out of fashion in time. The terms of the RMA contemplate renovation and refurbishment, and allow the respondent as the rental manager to effect competitive changes. The RMA, practically and properly, grants the respondent a wide discretion to reasonably effect change.
29Even if I am incorrect in this regard, I find that it is an implied term of Article 2.1(a) that Acceptable Standards may be changed by majority of PSOS from time to time. That is the essence of the democracy envisaged by the condominium legislation, and the discretion afforded to Events by the RMA. And in fact, that is what took place here. The three boards obtained the input of PSOs and followed the appropriate legal steps to implement the program.
31In my opinion, there has been no breach by the respondent of its obligations set out in the RMA. In fact, it is the claimant who is in breach of her obligation to maintain the unit in accordance with the Acceptable Standard now recognized and adopted by the PSOs. The respondent has opted to not enforce some of the remedies available to it and to simply treat the claimant’s participation in the hotel leasing program to be at end. In my respectful view, the respondent has the authority to opt for that option.
32The claimant is not without choices. If she chooses not to participate in the program, she is a liberty to rent out her suite in its current condition provided such is on a yearly tenancy. In alternative, she can use her unit as a residential suite or as a pied-a-terre as contemplated by the Declaration.
11The applicant eventually was forced to withdraw Unit 2905 from the Hotel Pool because her unit had not been renovated. She also was not allowed to re-enter the Hotel Pool and on or about September 23rd, 2015, the applicant sold her unit.
12The applicant also indicated in her factum that her unit sold for a lesser price because she was no longer in the Hotel Pool. There is no expert opinion evidence on this latter point or that her unit would have been rendered unsuitable for long-term residence usage.
13The most contentious issue is whether the renovations carried out by the Hotel Management was in conformity or non-compliance with the Declaration. The applicant points out that the Declaration mandated that there would be drawing and/or specifications detailing the location, materials and method of construction and installation of the renovations; and that there would be a certificate of a qualified architect who would be consulted for input with respect to these renovations both before and after the work was performed.
14The Declaration as relied on by the applicant and more particularly the specific paragraphs relied upon by the applicant are as follows:
(d) No owner, other than the Declarant, shall make any structural change or alteration in or to any unit, without the prior written consent of the Board. Without limiting the generality of the foregoing, no boundary wall, load bearing partition wall, floor, door, window, toilet, wash basins, sink, heating, air conditioning, plumbing or electrical installation with the exception of electrical light fixtures contained in the unit, shall be replaced, removed, or otherwise altered without the prior written consent of the Board. This provision is not intended to restrict an owner from carrying out a change which is solely decorative in nature, including any change to the configuration of partition walls within the residential unit, provided such walls or partitions are not load bearing and contain no service conduits that serve any other unit or the common elements of the Building.
Prior to any work which the owner is entitled to perform hereunder and with the prior written consent of the Board, the owner shall lodge with the Corporation the drawings and specifications detailing the location, materials and method of construction and installation of such work, together with a certificate addressed to the Corporation from a duly qualified architect and/or structural engineer carrying on business in the Province of Ontario certifying that if the work is carried out in the accordance with drawings and data so lodged with the Corporation, the structural integrity of the common elements will not be impaired and such work will not interfere with or impair structure where the functioning or operation of any machinery and equipment which is part of the common elements.
All work performed by the owner shall be carried out I accordance with:
(i) the provisions of all relevant municipal and other government by-laws, rules, regulations or ordinances;
(ii) the conditions, if any, of approval by the Corporation; and
(iii) the drawings, specifications and data lodged with the Corporation.
Forthwith following the completion of any work which an owner is entitled to perform hereunder, the owner shall deliver a further certificate from the said architect and/or engineer, or such other architect and/or engineer as may be acceptable to the Corporation, certifying that the work has in fact been completed in accordance with the drawings and data previously lodged with the Corporation, the structural integrity of the common elements has not been impaired, and that such work has not interfered with or impaired any structure or the functioning or operation of any machinery and equipment which is part of the common elements; or failing such certification, specifying in reasonable detail the reasons why such certification cannot be made.
15In addition, as indicated, per paragraphs 11 (a) through (d) of the application, it is the Declaration that is relied on in the applicant’s pursuit of damages. Succinctly, the failure of the owner of the condominium to obtain either architects or engineering certificates prior to the renovations.
16The applicant through counsel has now acknowledged that the declaration as a matter of law is not a contract and thus no breach of contract can flow from any breach of the declaration.
C. Analysis
1) Issue: Ownership and Status
17The definition of owner under the Condominium Act is under section 1 (1) (c) as follows:
In relation to a corporation other than a leasehold condominium corporation elements condominium corporation, a person who owns a freehold interest in a unit and its appurtenant common interest and who is shown as the owner in the records of the land registry office in which the description of the corporation is registered and includes a mortgagee in possession and a declarant with respect to any unit that the declarant has not transferred to another person.
18Furthermore, section 135 (1) of the Condominium Act states as follows:
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.
19The first issue succinctly stated is whether the applicant is an owner under the Condominium Act? As stated by the respondent in his factum and based on the decision in Kim v. Trump, the applicant sold her unit on September 23rd, 2015 and commenced this application on May 26th, 2017 and thus she was not an owner and has, therefore, no standing.
20While the decision in McKinstry v. York Condominium Corp. No. 472 holds that if an owner commenced an action prior to selling his/her unit, an action for damages for oppressive conduct by the defendant corporation can be maintained. Nevertheless, the simple meaning of both section 1 (1) (c) and section 135 of the Condominium Act does not reflect a scenario where a previous owner may found a cause of action.
21Counsel for the applicant is most direct in indicating that a more expansive reading of these sections should be contemplated and that past damages sustained by a unit owner should be compensated. In this sense she relies on paragraphs 33 and 34 of the McKinstry decision which state as follows:
33This interpretative principle and the foregoing passages apply to s. 135 of the Condominium Act, 1998. This new creature of statute should not be unduly restricted but given a broad and flexible interpretation that will give effect to the remedy it created. Stakeholders may apply to protect their legitimate expectations from conduct that is unlawful or without authority, and even from conduct that may be technically authorized and ostensibly legal. The only prerequisite to the court’s jurisdiction to fashion a remedy is that the conduct must be or threaten to be oppressive or unfairly prejudicial to the applicant, or unfairly disregard the interests of the applicant. Once that prerequisite is established, the court may “make any order the judge deems proper” including prohibiting the conduct and requiring the payment of compensation. This broad powerful remedy and the potential protection it offers are appropriately described as “awesome”. It must be remember that the section protects legitimate expectations and not individual wish lists, and that the court must balance the objectively reasonable expectations of the owner with the condominium board’s ability to exercise judgment and secure the safety, security and welfare of all owners and the condominium’s property and assets.
34I reject the defendants’ submission that the words “is or threatens to be” in s. 135(2) limits the remedy to conduct that is present or prospective. Section 4 of the Interpretation Act, R.S. O, 1990, c. I.11 provides that “[t]he law shall be considered as always speaking and, where a matter or thing is expressed in the present tense, it is to be applied to the circumstances as they arise, so that effect may be given to each Act and every part of it according to its true intent and meaning.” Moreover, s. 135(3) allows the court to prohibit the conduct or to make an order requiring the payment of compensation. Prohibiting the conduct would be appropriate where the conduct is threatened or taking place. Ordering compensation would be appropriate when the conduct has already taken place.
22The last two sentences of that decision, wherein the hearing judge concluded that conduct that is taking place (present tense) could be prohibited by a court and ordering compensation for conduct that has already taken place (past tense) would seem to suggest that past ownership is all that is necessary to commence an action.
23I disagree. As was done in this case and in many other cases, there are provisions in the Condominium Act that contemplate arbitration and mediation (see section 132 (4) of the Act) for ongoing problems with unit owners. This section reads as follows:
Every declaration shall be deemed to contain a provision that the corporation and the owners agree to submit a disagreement between the parties with respect to the declaration, by-laws or rules to mediation and arbitration in accordance with clauses (1) (a) and (b) respectively.
24However, the status of ownership is contemplated in section 135 of the Condominium Act. Past ownership and past complaints of conduct, for example, before a past Board of Directors, is too remote a claim and is not contemplated by this statute.
25The definition of owner could have easily been crafted by adding the simple words or “past owner”. To interpret the definition of owner by adding a past reference would not be consistent with the simple reality that any claim brought before the Superior Court of Justice must be by a unit owner.
26For those brief reasons the application is dismissed. Nevertheless, in the event I am wrong in my determination I do intend to refer to some of the other issues that the parties have argued before me.
2) Issue: Did ‘Events’ through the Rental Management Agreement breach section 19 of the Declaration?
27Although counsel for the applicant asserts that ‘Events’ was acting as agent or attorney for the owner and thus has failed to comply with section 19 of Declaration when it did not obtain a certificate from a qualified architect or engineer, I do not conclude that this omission allows for any remedy.
28The three Boards and every other unit (329 out of 330 units) described as part of the Hotel Pool agreed to have these renovations performed. The requirement of an architect or an engineer certificate for the internal renovations was deemed not a necessary by ‘Events’ (the Rental Manager) and their project manager (Quest Project Management) who stated that the refurbishment was as follows:
Purely decorative…the scope of the work included replacement of wall-covering, paint, carpet, floor surfaces and kitchen cabinets. The scope of the work did not include any partition walls or entry doors to any of the suites, any sprinkler work or any mechanical work. Some electrical work was conducted such as outlet relocation and plug/switches replacement for which electrical permit was obtained and ESA inspection was conducted…it was not necessary to engage the services of an architect/engineer for this work.
29The unit owner, as was done by the applicant, did not have to renovate her unit. As much as the Rental Manager was given certain duties and obligations, the actual unit owner did control what would or would not happen in her unit.
30Furthermore, while the Declaration does mandate an architect’s or engineer’s certificate for the renovations as described in the ‘Suite Renovations’, it was clear that the complaint by the applicant was not a section 19 breach but the cost occasioned by the renovations of approximately $26,000.00. She also wanted to remain in the Hotel Pool without these renovations and at the time was relying on Article 2.1 (a) of the RMA.
31This section stated that the respondent, “Events” had to maintain the same configuration and layout of the unit as it was on the original transfer date. Certainly the arbitrator concluded that the renovations proposed would not and did not materially affect the configuration of the unit.
32Most significantly, even if a requirement mandated this architect/engineer certificate, the breach of same does not and did not amount to a breach of contract as conceded by counsel for the applicant. At best, there may have been non-compliance with the Declaration.
33My determination on this issue means that the application would be dismissed on this issue as well.
3) Issue: Does this application fail under the doctrine of issue estoppel?
34The issue before the arbitrator was whether the applicant could remain in the Hotel Pool with a non-renovated unit. There is absolutely no reference to the failure to comply with section 19 of the Declaration in this judgment by the arbitrator. While the parties are the same, the condominium complex is the same, and the parties are again involved in litigation, I do not see this application as failing as a result of the doctrine of issue estoppel or under the doctrine of res judicata.
4) Issue: Does this application fail as a result of it not being brought within the limitation period?
35As indicated in the factum of the respondent, the applicant was made aware by her lawyer that she should study the Declaration and that no architect or engineer had prepared the original plans (this was as of December 6th, 2013).
36The applicant acknowledges this fact but indicated that it was not until June 2nd, 2015 when the applicant through her common law spouse discovered that no architect or engineer had certified the renovations and thus renovations would technically be in violation of section 19 of the Declaration.
37Given this imputed knowledge of the applicant through her common law spouse, I do not believe the Limitation Act comes into play as the application was brought on May 26th, 2017.
5) Did the respondent corporation conduct itself in a manner that was threatening, oppressive, unfairly prejudicial or did it unfairly disregard the interest of the applicant?
38In paragraph 11 of the decision of Justice Peterson in Weir v. Peel Condominium Corp. N0. 485, he summarized the law of an oppressive remedy as follows:
A distillation of the jurisprudence produces the following definitions: “Oppression” is conduct that is coercive, harsh or an abuse of power. “Unfair prejudice” is conduct that limits or adversely affects a party’s rights and constitutes inequitable treatment relative to others. “Unfair disregard” means to ignore without cause or treat the legitimate interests of the claimant as being of no importance.
39No renovations were ever done on the applicant’s unit whether there was or was not an architect or engineer’s certificate. I agree with counsel for the respondent when he submits that the ‘oppression’ seemed to be that the other 329 unit owners did not have the benefit of this certificate. This of course makes little sense since the applicant cannot be said to have any interest in the units owned by others.
40The real complaint is found in the arbitrator’s decision when he concludes that the failure of the applicant to agree to renovate her apartment resulted in a determination by the RMA to terminate her hotel leasing programme. However, he also points out at Paragraph 32 the following:
The claimant is not without choices. If she chooses not to participate in the programme (although fairly put this ability was terminated by the RMA), she is at liberty to rent out her suite in its current condition provided such is on a yearly tenancy. In the alternative, she can use her unit as a residential suite or as a pied-a-terre as contemplated by the Declaration.
41Consistent with this choice indicated by the arbitrator, we are also aware that only 330 units were involved in the Hotel Pool out of 575 total units in the condominium complex. In short, a breach of a declaration does not lead one to conclude that damages necessarily flowed from this breach, particularly since no contract breach is claimed or acknowledged as occurring.
42In the end result, I conclude that there was neither oppressive conduct, threatening conduct, unfair prejudicial conduct, nor an unfair disregard of the interest of the applicant. The application for those reasons is dismissed.
43There are three other issues that have been presented in this application. They are bad faith and misrepresentation; abuse of process; and the releases provided by the named applicant and her common law spouse Robert Verdun with respect to the six directors and “take any proceeding in connection with any claims released by virtue of this release against any other person, entity or corporation who or which might claim contribution, indemnity or other relief over, from or against the releases.
44There is no mention of any facts upon which the applicant relies with respect to bad faith or misrepresentation.
45With respect to the abuse of process argument advanced by the respondent, in light of my determination on the issue of res judicata and/or issue estoppel, I do not think any determination on that issue is needed.
46Finally, I am of the view that this release may constitute a release against this named corporation in this application in light of the assertion that this release applies to any claim over by this corporation. I am just not convinced on a balance of probabilities that the wording of this release is sufficiently exact or targeted to include the remedies of damages sought by the applicant within this application.
47On this latter point, I would have to hear oral evidence or testimony before I could be satisfied that this release had this broad net effect.
48With respect to the issue of costs, I indicated to the parties that my trial coordinator can be approached to set up a time to make submissions to me through teleconferencing. My only concern or pause in this process, is that both counsel continue to agree with this procedure, and any case law be provided to me together with the respondent’s claim (bill) for costs.
The Honourable Mr. Justice John A. Desotti
Date: December 14, 2017 Corrected Released: December 15, 2017
Corrigendum
Two factual errors corrected:
Paragraph [1] corrected application date of May 15, 2017 to May 26, 2017. Therefore now reads: “The application is brought under section 119 and 135 of the Condominium Act, 1998 S. O. 1998, c. 19 and is dated May 26th, 2017.”
Paragraph [7] Company name corrected to read King not Kin and Yonge not Young. Therefore now reads: “The interests of the Participating Suite Owners (PSOs) are represented by a company called King-Yonge Suite’s Inc. or KYS and major decisions regarding the Hotel Pool Units required the involvement and approval of all three Board of Directors.”