Case Law: An Important Lesson about Professionalism
Megan Mackey is a partner with Miller Thomson LLP, practicing condominium litigation. She advises condominium corporations, unit owners and developers, and regularly appears before the Superior Court of Justice, mediators and arbitrators.
An Important Lesson about Professionalism
Couture v. Toronto Standard Condominium Corporation No. 2187
When boards of directors make decisions which they believe are for the greater good of the community, they can sometimes negatively impact some of the owners. Boards have an obligation to act professionally and reasonably when responding to owners’ concerns and complaints. Unfortunately, some boards can take unreasonable and even unlawful positions when dealing with unit owners. This can more often be the case where the owner in question is known as “difficult.”
In the recent case of Couture v. Toronto Standard Condominium Corporation No. 2187 [2015 ONSC 2187 (decision dated December 4, 2015)], a dispute arose between the board and a unit owner over the owner’s right to lease a parking space. Both sides took extreme and unreasonable positions and the dispute eventually wound up in court. The judge who heard the application found that the dispute had degenerated into name-calling, hyper- bole, and a waste of time, money and effort, which caused distress to both sides. The judge was particularly critical of the board’s behaviour and held that as elected representatives, board members must behave in an “amicable, businesslike and neighbourly manner”. The judgment contains a number of important lessons for board members and property managers.
TSCC 2187 is a residential condominium corporation containing 44 residential units but only 32 parking spaces. The parking spaces are part of the common elements and are leased to unit owners. Parking spaces are not associated with any particular unit. When a parking space becomes avail- able, the board leases it to the next resident on the waiting list.
Couture was using her parking space to store a “junker.” The vehicle was uninsured, unregistered and had two flat tires. The board decided that the garage should not be used as a storage facility. The board notified the owner that it would revoke her parking privileges if her car was not roadworthy. Unfortunately, the condominium corporation did not have written parking leases and it was not clear if the board had the right to terminate them. The unit owner removed her vehicle from the parking garage but insisted that she had the right to lease the parking space even if she herself was not using it. The board terminated the owner’s lease and reassigned the parking space to another owner. The judge found the board’s decision to be reasonable in the circumstances.
It was at this point that the dispute turned sour. The board sent the owner a number of disrespectful and dismissive letters, which were some- what inconsistent with each other. The owner paid her common expenses and continued to pay the extra $50 for the parking lease. The board returned the owner’s post-dated cheques for monthly common expense payments and asked for new cheques which did not include the $50 monthly parking fee. The owner sent the same cheques back to the corporation and maintained the position that she was still leasing a parking space. The board refused to cash the cheques, took the position that the owner failed to pay her common expenses, and registered a lien against her unit. The owner finally relented, paid the lien, and delivered cheques which did not include the parking fee.
The corporation then levied a $250 “administration fee” against the owner’s unit in relation to allegations about the conduct of the owner’s husband. The corporation registered a second lien against the owner’s unit when she failed to pay the administrative fee and associated legal expenses. The owner tried to bring the matter to dispute resolution. She issued a Notice of Dispute but the board refused to meet with her. The owner issued a Notice of Mediation, but the board demanded that the owner pay the entire mediator’s fee, which was contrary to the corporation’s bylaws. No mediation was held.
The unit owner then brought a court application for relief from oppression. The owner and her husband moved out of the building before the matter was decided by the court. The judge agreed that the board’s actions were “harsh,burdensome,and oppressive”. The judge held that condominium corporations do not have the power to levy administrative fees or fines. The judge found that both condominium liens were unlawful and that the board had breached its own bylaws when it refused to meet with the unit owner after receiving a Notice of Dispute. The condominium corporation was ordered to return the money collected under the liens and pay $1,000 as nominal damages for oppression. Both sides were ordered to bear their own costs. Although the board’s conduct was illegal and oppressive, the judge found that the unit owner brought some of this upon herself by insisting on keeping a parking space she did not need.
In the end, both sides spent thousands of dollars on unrecoverable legal fees. The board was reprimanded by the court for its conduct. The unit owner ended up selling her unit and moving. Her husband was charged criminally. The judge called the situation a “dog in the manger approach” to a parking space that the unit owner didn’t even need. The case teaches us the following:
• Letters sent on behalf of the board must always be professional. The board and management should maintain a consistent position or explain any change to its position.
• Board members should sit down with unit owners to discuss differences instead of sending sarcastic letters and retaining counsel. Condominium corporations cannot refuse to meet with owners.
• Condominium corporations should cash cheques received for common expenses and notify the owner if the amount is too low or too high. In this case, instead of liening the unit because the common expense cheque included payment for a parking lease, the corporation should have cashed the cheque on a “without prejudice” basis and returned the overpayment to the owner.
• Condominium corporations should always have written lease agreements. Unit owners are increasingly turning to the courts for relief from oppression when condominium boards become unreasonable or make unacceptable decisions. The Couture decision shows that the courts will not tolerate boards who abuse their authority and treat owners with disrespect.
First published in CM Magazine