COURT FILE NO.: CV-20-653741 and CV-21-666591
DATE: 20211122
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: TORONTO STANDARD CONDOMINIUM CORPORATION NO. 2364, Applicant
-and-
TORONTO STANDARD CONDOMINIUM CORPORATION NO. 2442 and DEL PROPERTY MANAGEMENT INC., Respondents
BEFORE: FL Myers J
COUNSEL: Fatima Vieira, for the applicant
Jordan Cowman, for the respondent
HEARD: November 16, 2021
ENDORSEMENT
The First Application
[1] By reasons dated August 28, 2020, Arbitrator RM Rosenblatt decided a complex and lengthy arbitration between TSCC 2364 and TSCC 2442. There is no question that the applicant is entitled to an order enforcing the arbitration award under s. 50 of the Arbitration Act, 1991, S.O. 1991, c. 17 and I grant the order accordingly.
[2] But that does not give the applicant what it wants. In its first application, the applicant also asks for:
Further, the applicant seeks a permanent injunction pursuant to s. 134 of the Condominium Act, restraining the respondents from any and all back charges unless unanimously approved by the subcommittee of the Two-Way Shared Facilities ("TWSF") and the committee(s) of any other of the contributors to the shared facilities.
- Further and in the alternative, the applicant seeks an order under the oppression remedy, pursuant to s. 135 of the Condominium Act, 1998, S.O. 1998, c. C. 19, (the "Condominium Act") for compensation for the unapproved back charge of $3,085 per month from April 2018 until January 2021 in the total amount of $104,890 and the unapproved back charge of $500 per month from October 2018 to October 2020, in the total amount of $27,342 both initiated and maintained by the respondents, TSCC 2442 and its agent, the respondent, Del Property Management Inc ., against the applicant, paid to the applicant in its proportionate share of 50.88% within 7 days of the date of this order plus pre-judgement interest and substantial indemnity costs.
Factual Background
[3] TSCC 2364 and TSCC 2442 are both part of the same development. Each has some independent services that it provides for itself. They share some services solely between the two condominium corporations. They share yet other services with other participants in the development.
[4] For better or for worse, relations between the condominium corporations are governed by a shared facilities agreement that creates independent sub-committees to manage each of the multiple relations between and among the community participants. So, as between TSCC 2364 sand TSCC 2442, there is a Two-Way Shared Facilities Committee to make decisions about their specifically shared services. There is also a Five-Way Shared Facilities Committee on which representatives of the two condominiums sit with representatives of three other community participants with whom they share other aspects of the facilities.
[5] On each of these committees, each participant has a veto. There must be a budget agreed upon unanimously. Then, the budget is subject to approval by each member’s board of directors independently. While each committee member is bound to put matters approved at a committee to its board for ratification in good faith, there is nothing fettering the independent discretion and business judgment of each board of directors.
[6] Del is the property manager of the Two-Way Shared Facilities. It makes no effort to be independent or neutral as between the two constituent condominium owners. Del and TSCC 2442 are allied against TSCC 2364. Both TSCC 2442 and Del are represented the same counsel.
[7] Del was initially imposed as manager on TSCC 2364. Its management contract was adopted (or not rejected) on turnover. However, TSCC 2364 terminated Del’s management agreement for its building at a later date.
[8] When construction of TSCC 2442 was finished and it had its turnover meeting, it too kept Del as its manager. Because of this, under the shared facilities agreement between the parties, Del remained the manager of the Two-Way Shared Facilities whether TSCC 2364 liked it or not.
[9] TSCC 2364 says that Del and TSCC 2442 have improperly charged it for services for the Two-Way Shared Facilities that it does not want or need and that it has not approved in a budget or otherwise. TSCC 2364 and TSCC 2442 became locked in combat and deadlocked on the Two-Way Shared Facilities Committee.
[10] Prior to the dispute developing, a common banking facility was established for the Two-Way Shared Facilities. Del and TSCC 2442 initially had sole signing authority. In November, 2017, TSCC 2442 agreed to provide TSCC 2364 with signing authority on the bank account as well. However, the banking authorities required two signatures on each cheque. TSCC 2442 and Del together therefore controlled the bank account.
[11] The Arbitrator ordered TSCC 2442 to change the banking authorities to require all three entities to sign cheques.
[12] A principal issue before the Arbitrator was whether Del was entitled to backcharge TSCC 2364’s accounts to pay what it viewed as TSCC 2364’s obligations for the Two-Way Shared Facilities despite the lack of an approved budget and without the unanimous consent required at the Two-Way Shared Facilities Committee to bind TSCC 2364 to any payments.
[13] The Arbitrator ordered that backcharges were to be approved in the budget of each subcommittee or invoiced. He also required Del to collect outstanding backcharges owing to the Two-Way Shared Facilities Committee and TSCC 2364 from other participants.
[14] Despite the interpersonal issues between the representatives of the two protagonists, the Arbitrator declined to remove either of them from the Two-Way Shared Facilities Committee. If the parties wish to be represented by people who cannot get along and who, with counsel, cast the nastiest of allegations against each other, that is their right. As discussed below, the representatives’ lack of ability to hear each other’s interests, negotiate, and compromise may lock the condominium corporations into interminable arbitration proceedings. But until the parties choose to find a way to get along in their mutual best interests, their constating documents provide their desired manner of dispute resolution.
[15] The Arbitrator ruled that the parties’ representatives have a duty to attend meetings of the Two-Way Shared Facilities Committee and to vote on matters before the meeting in good faith. He held that TSCC 2364’s response to the dispute by refusing to attend committee meetings to try to prevent the Two-Way Shared Facilities Committee from having a quorum was not a legitimate approach.
[16] In essence, Del and TSCC 2442 were using accounting “backcharges” to make TSCC 2364 accountable for what they say were its obligations before and while TSCC 2364 refused to attend to discuss budgets. They were circumventing TSCC 2364’s right to approve the payments.
[17] TSCC 2364 submits that the Arbitrator has effectively required TSCC 2442 and Del to refund amounts of chargebacks taken without the approval of TSCC 2364 through the Two-Way Shared Facilities Committee. It also argues that chargebacks against any committee are forbidden unless the expenditures are approved in a budget for the committee.
[18] The actual order of the Arbitrator says:
(xv) That Del or any manager of the 2WSF provide an accounting for services allocated to other members of [the development]. I also order that Del arrange for the collection of the amounts, if any, still outstanding to the 2WSF or to TSCC 2364 from any other party responsible to pay the chargeback amount.
(xvi) That any chargeback estimates be either included in the Budget or alternatively, the amount of the chargebacks be invoiced and collected as the Subcommittee may direct.
[19] The Arbitrator made it clear in para. 158 of his reasons, that he dismissed TSCC 2364’s claim to reverse past backcharges on the evidence before him. His order applied to future backcharge methodology. At the same time however, he ordered Del to collect amounts still outstanding. I do not know what those amounts are.
[20] Commencing in January, 2021, Del and 2442 changed their approach. They started accounting for amounts they say were due by TSCC 2364 for Two-Way services by “backcharging” surplus amounts allocable to TSCC 2364 at the Five-Way Shared Facilities Committee. Del and TSCC 2442 say that since the Five-Way Committee had approved expenditures as between Five-Way services and Two-Way services, TSCC 2364 was bound as it is a member of both committees.
[21] There are factual issues around whether TSCC 2364 approved the budget at the Five-Way Shared Facilities Committee or whether its approval was conditional or rescinded. I am not making factual determinations about the processes or meaning of steps taken at the Five-Way Shared Facilities Committee.
[22] There is some indication in the documentary evidence that the expenditures for which the Five-Way Committee has purported to backcharge the Two-Way Committee may not properly be Two-Way expenses. That is, it appears that TSCC 2442 and Del might be using the artifice of accounting backcharges at the Five-Way Shared Facilities Committee to make TSCC 2364 pay expenditures that it has not approved in a budget at the Two-Way Shared Facilities Committee.
[23] During the Arbitration, the Arbitrator ruled that the other members of the Five-Way Shared Facilities Committee were not necessary parties to the arbitration. The only issues before the Arbitrator involved the relationships between the parties to the Two-Way Shared Facilities Committee. That is the case here too. If the applicant intended to widen the scope of the proceeding in its oppression claim, it failed to name the necessary parties to do so.
[24] In any event, in light of my findings below, it would not matter if others were named as parties in this proceeding. The forum for the resolution of these disputes is in arbitration and not before the court.
[25] I will deal with the outcome on this issue after I introduce the second application that I have now also heard.
The Second Application
[26] In its new application, TSCC 2364 seeks an order by way of an oppression remedy or an injunction precluding TSCC 2442 and Del from continuing to draw $1,754.84 per month from the Two-Way Shared Facilities bank account using a pre-approved payment plan to pay TSCC 2364’s share of Del’s ongoing management fees after June 30, 2021.
[27] As I noted above, Del’s ongoing management of the Two-Way Shared Facilities was dictated by the underlying agreements once TSCC 2442 retained Del. The management agreement between TSCC 2442 and Del has a term that ended on June 30, 2021.
[28] The Arbitrator ordered implementation of a process to retain a new Two-Way Shared Facilities manager. The process allowed Del to tender for the position. At para. 239 (vi) of his decision, the Arbitrator held:
(vi) That at least six (6) weeks prior to the end of Del's management agreement with TSCC 2442 (June 30, 2021) the Subcommittee shall take such steps as they may agree to obtain competitive tender bids for the appointment of a manager. Del shall have the right to submit a proposal or bid in the same format as any other potential manager. The selection shall be based on the principle of Unanimous Approval. [Emphasis added.]
[29] In the least surprising event of the year, the parties could not agree on a tender process despite the entreaties from the Arbitrator that they need to try to get along in their mutual interests.
[30] TSCC 2364 says that in para. 239 (vi) above, the Arbitrator has ordered that Del’s management ended at June 30, 2021. Therefore, it submits, that it cannot be forced to keep paying for Del’s management. Moreover, although it provided a pre-approved withdrawal to the bank for its monthly share of Del’s management fees, TSCC 2364 says it is improper and oppressive for TSCC 2442 to continue to utilize that withdrawal when the Arbitrator ordered that all cheques were to have the signatures of all the parties.
[31] TSCC 2364 says that it is oppressive that it continues to lack access to its share of the bank account including the $114,000 (approximately) that the Arbitrator ruled was due to it.
[32] TSCC 2442 points to its management agreement with Del. The agreement provides that once Del’s term comes to an end, Del continues to serve as manager on a month-to-month basis until it is replaced. The pre-approved payment process is also provided for in the agreement. All of this is standard fare to ensure that the development is never left without management during a turnover.
[33] The bank is understandably unwilling to act without unanimous consent or a court order.
[34] In my view, this is not an issue of enforcement of the Arbitrator’s order. The finding of the end date of Del’s term was a simple factual recitation from Del’s management agreement. I do not read para. 239 (vi) as mandating that Del’s management contract stops applying in accordance with its terms on that date. There is no order for me to enforce.
[35] What was mandated by the Arbitrator however, was that the parties agree on a process for tendering for a new management contract. This was not done because TSCC 2364 insisted that the new contract be budgeted at the same amount as the old contract. TSCC 2442, by contrast, insisted on quadrupling the budget for the Two-Way Shared Facilities manager.
[36] Somehow, it escaped the parties notice (or caring) that the Arbitrator’s ruling required them to find a way to bridge the gap to settle on a tender process. This might have required a compromise between the continuation of the existing budget of (approximately) $20,000 sought by TSCC 2364 and the budget of (approximately) $90,000 proposed by TSCC 2442.
[37] Ms. Vieira was clear that TSCC 2364 knows the number of hours of common management required and it sees no reason to exceed the existing budgetary amount. Presumably TSCC 2442 feels equally resolute. The parties prefer to disagree than to settle. I have no way to force the parties to agree. So, here too, there is an existing disagreement as to what is to happen or how the shared facilities’ agreement allocates the benefits and burdens at play.
Decision
[38] TSCC 2442 submits that these proceedings should be dealt with in arbitration. I agree. The agreements between the parties require all of the foregoing disagreements to be resolved by arbitration. Ms. Vieira submits that it would be an undue hardship for her client to have to endure another lengthy, expensive arbitration process without access to its funds. TSCC 2364 claims it being oppressed.
[39] An oppression remedy lies under s.135 of the Condominium Act, 1998, SO 1998, c 19, where the reasonable expectations of the parties are unduly prejudiced. Here, the reasonable expectation of the parties is that the agreements between them will be followed.
[40] The Supreme Court of Canada has made it clear that the parties’ agreements may be viewed as reflecting their reasonable expectations. BCE Inc. v. 1976 Debentureholders, 2008 SCC 69, at para. 79. It cannot be oppressive to require a dispute to be resolved by arbitration when that is what both parties agreed upon. That is the reasonable expectation of the parties.
[41] It is open to the parties to work together and with the Arbitrator to reduce the procedural complexities of an arbitration if they are so minded.
[42] Claiming an oppression remedy under s. 135 of the statute does not prevent a matter from being arbitrable. In Toronto Standard Condominium Corporation No. 1628 v. Toronto Standard Condominium Corporation No. 1636, 2021 ONCA 360 the Court of Appeal rejected the notion that characterizing a matter as “oppression” ousts the jurisdiction of an Arbitrator:
[28] The language of s. 135(1) is permissive, not mandatory. It contemplates that, in certain circumstances, it may be necessary to have resort to the Superior Court of Justice to obtain relief. However, s. 135(1) does not oust the jurisdiction of an arbitrator to consider the same relief, if that relief is part of the dispute in question that properly falls within the terms of the arbitration provision or within the terms of s. 132. In this case, we have already noted the broad language of the arbitration clause. There is nothing, in our view, that would preclude an arbitrator, acting under the authority of that arbitration clause, from considering the alleged oppressive conduct advanced by the respondent in appeal, at least as it relates to the actions of TSCC 1636.
[43] In a later decision in the same dispute, the Court of Appeal reiterated the limited role of the court in matters that the parties and the statute intend to be resolved by arbitration. In Toronto Standard Condominium Corporation No. 1628 v. Toronto Standard Condominium Corporation No. 1636, 2020 ONCA 612, Jamal JA (as he then was) discussed the decision of the Supreme Court of Canada in TELUS Communications Company. v Wellman, 2019 SCC 19. Jamal JA explained what he understood Supreme Court of Canada Justice Moldaver meant in Wellman, as follows:
[32] He stressed that these policies and principles are intimately related: “[t]he policy that parties to a valid arbitration agreement should abide by their agreement goes hand in hand with the principle of limited court intervention in arbitration matters”: at para. 55 (emphasis added). The principle of limited court intervention in arbitration matters fosters party autonomy and respects the parties’ choice of arbitration as their dispute resolution mechanism. As Moldaver J. explained, the “hands off” approach to matters governed
by the Arbitration Act is “in keeping with the modern approach that sees arbitration as an autonomous, self-contained, self‑sufficient process pursuant to which the parties agree to have their disputes resolved by an arbitrator, not by the courts”: at para. 56, citing Inforica Inc. v. CGI Information Systems and Management Consultants Inc., 2009 ONCA 642, 97 O.R. (3d) 161, at para. 14.
[44] The parties have agreed that issues regarding the relations between them and their various shared faculties committees are to be resolved by arbitration. The question of backcharging has already been submitted to an arbitration. Unfortunately, enforcing the arbitration award does not provide answers to the issues now raised by the applicant about backcharges. Neither does it resolve what is to happen to the pre-approved banking arrangements when the parties failed to agree on how to tender to find a replacement for Del as ordered.
[45] These are issues that the parties have agreed to arbitrate and which I am required to approach on a “hands off” basis if they are arbitrable. I do not see any independent content to either claim to move it out from an arbitrator to the court as oppression at least not at first instance. If the alleged oppression is not resolved by decision(s) on the matters within the Arbitrator’s jurisdiction under the agreements between the parties, the matter can be reviewed again.
[46] In an appropriate case, the court may consider making interim orders to prevent oppression pending an arbitration of the underlying dispute. But, in this case, I see no basis for the court to intervene with interim or interlocutory injunctive relief pending one or more decisions by the Arbitrator or an arbitrator. The issues are totally expressed in money and are compensable by one or more damages awards. Injunctions are only granted if, while waiting for the arbitration, the moving party will suffer irreparable harm that cannot be compensated later by payment of money if it wins the arbitration. Injunctions pending later decisions are not granted when all that is in issue is money and there is no question of the other side’s ability to pay if ordered to do so.
[47] Ms. Vieira submits that the inability of TSCC 2364 to control its own bank account is irreparable harm. Its board is being actively denied its statutory ability to manage the condominium she argues. The board is being precluded from fulfilling its statutory obligations and this lack of autonomy and control cannot be compensated in money later.
The difficulty with this argument, in my view, is that it is just a spin on the fact that the condominiums agreed to set up their affairs in a particular way. The board of TSCC 2364 did not find itself suffering from an inability to fulfill its duties when TSCC 2364 was a net recipient of funds under the shared facilities processes a few years ago. The fact is that the two condominiums are in a dispute about how funds are to be dealt with and accounted for. The legal structure in place is the structure that they agreed upon and lived with for several years. Once the Arbitrator or an arbitrator decides what the agreements require, compensation will be paid and the parties will go on.
[48] This is not a case in which equity calls for an interim or interlocutory injunction in my view.
[49] Neither is either of these applications one in which I find it appropriate to award costs. While TSCC 2442 has won the battle of forums, I expressed a concern above about the legitimacy of the recent “chargebacks” by Del and TSCC 2442. In addition, the legal principle “it takes two to tango” applies here. With TSCC 2364 refusing to attend meetings and both sides seemingly refusing to negotiate anything with which they disagree, I cannot say where the ultimate fairness lies or who has really succeeded in these proceedings.
[50] It is perfectly clear to me however, as it was to the Arbitrator, that the boards of directors of the two condominiums should consider whether they are well-served being consigned to endless, expensive battles over grand principles against evil foes. Is it not obvious that instead of tilting at windmills, the parties need to find a modus vivendi [a way to live together]? It is really not that hard for people of goodwill to find ways to fairly allocate relatively small amounts of money so that the members of the community can enjoy top-notch, cooperative, helpful services for the benefit of them all.
FL Myers J
Date: November 22, 2021