Canada: Oppressed Condo Owners Force Changes To The Declaration

Last Updated: September 22 2014
Article by Rodrigue Escayola

We often think that democracy is the ultimate decision-making process in a Condominium Corporation. Well, it isn't so simple. A recent decision of the Ontario Superior Court forced a Condominium Corporation to amend its Declaration to protect the interests of unit owners who claimed oppression.

The first challenge to the general tenet that majority rules in condominium governance is that various decisions require various levels of support from the owners:

  • Quorum for an AGM is fixed at 25% (unless a bylaw provides differently). 
  • A majority of the owners present at an AGM (12% of all owners) can therefore decide on many issues.
  • Fifteen percent of owners are sufficient to call a special owners meeting.
  • Fifty percent are required to adopt a bylaw.
  • Sixty-six and 2/3 percent are required to approve a substantial change to common elements. 
  • Finally, an amendment to the Declaration requires the support of 80% (or 90% in certain cases).  

This article will focus on the specific issue of amending a condominium Declaration and how a condominium Corporation must also consider whether an amendment to the Declaration (even if supported by 80% of the owners) risk oppressing an owner. Failure to do so may result in a court setting aside the amendment (or making an amendment of its own) despite the fact that the Corporation had the required support of 80% of its owners. A single oppressed owner may therefore be sufficient to force an amendment to the Declaration.

The factual background

This is the case of condominium owners who purchased a unit, a storage locker and a parking space from the developer. At the time of purchase, however, there were no available indoor parking space and no adequate storage locker in the building. The developer sold them instead a parking space and locker in the sister condominium Corporation (OCSCC 706), which was being built immediately beside the first one. As is often the case, these two condominium Corporations were concurrently developed, built and registered as two separate Corporations. At the time of purchase, there were no restrictions preventing non-residents from owning and using a parking and locker at OCSCC 706.

Some five years later, following some security breaches and acts of vandalism near the garage, the Corporation and its owners decided to amend their Declaration to specifically prevent the use and ownership of parking and lockers by non-residents.  In essence, these amendments prevented these neighbouring owners from using or owning their parking and locker. This amendment also had the effect of preventing them from being able to eventually sell their unit with parking and storage. Their only option was to try to sell their parking and storage to OCSCC 706's residents or to the Corporation.

The Applicants to this court case were the only non-residents owners and therefore the only ones affected by this amendment. The Corporation opted not to enforce this prohibition against the Applicants but only for as long as they owned their residential unit in the neighbouring complex. They were still prevented from selling their parking together with their unit to a non-resident.

The Applicants brought a court application

When the Applicants decided to sell their unit, they found themselves unable to sell it with parking and locker due to the amended Declaration. They brought an Application under section 135 of the Condominium Act, claiming that the amendment to the Declaration was oppressive and unfairly prejudicial to them. They sought an Order directing the Corporation to amend its Declaration to exempt them and any subsequent owners of their unit from the prohibition against ownership and occupation of the parking and locker by non-residents.

When the matter first came before the Court, the presiding Judge directed the Applicants to attempt to sell their unit to ascertain the relative value of the unit. The Applicants put their unit on the market for nearly two years with two separate listings: one with their parking, and one without parking. There was virtually no interest in the unit marketed without parking. Conversely, there was significant interest in the unit with parking but all offers were conditional on the Applicants obtaining a further amendment to the Declaration to allow non-residents to own and use the parking.

When the matter returned to court in 2014, the Applicants argued that their inability to sell their unit without parking and storage showed that the effect of the Declaration, as it stood, was oppressive or unfairly prejudicial to their interests as owners. They asked the Judge to amend the Declaration under section 135 of the Act.

What is oppressive in the context of the Condominium Act?

Section 135 of the Act grants judges the authority to make "any order" when faced with conduct which "is or threatens to be oppressive or unfairly prejudicial to the applicant or [when it] unfairly disregards the interests of the applicant". Basically, in the presence of oppression, the Condominium Act grants a judge with very wide remedial powers to rectify the situation.  The question in this case was whether this section granted the Courts with the authority to amend the Declaration under section 135 of the Act.

The Court reiterated that a conduct is oppressive if it is "burdensome, harsh and wrong" or if it "visibly departs from the standard of fair dealing" or if it is an "abuse of power". The purpose of this section is to protect the parties' reasonable expectations and to protect them from unfair treatment.  

The Corporation argued that it had not acted with malice or with the intent to harm. It also argued that the Applicants were not being treated differently than the other owners since the prohibition against non-residents using or owning parking applied to all owners of OCSCC 706. Finally, the Corporation argued that, if the amendment was found to be oppressive, the appropriate remedy was a monetary award limited to the loss value of the parking and locker.

The decision

The Court did not agree with the Corporation. It concluded that the Applicants' unit was virtually unsellable without parking. The Applicants had purchased their unit in good faith with the expectation that they would be able to sell it with parking and locker and the evidence confirmed that they would not have purchased their unit otherwise.

The Court concluded that this restriction on use and ownership had the effect of undermining the reasonable expectations of the Applicants and of unfairly disregarding their interests. As such, it was oppressive.  

The Court ordered the Corporation to amend its Declaration as requested by the Applicants, based in part on the fact that the amendments requested by the Applicants would not detrimentally affect the interests of any other unit owner in OCSCC 706.

Lessons learned

This case confirms that courts have, as part of their remedial powers under section 135 of the Act, the authority to amend the Condominium's Declaration even when it contains no error or inconsistencies. Indeed, under section 109 of the Act, the Court's jurisdiction to amend a Declaration is reserved to cases where it is necessary or desirable to correct an error or an inconsistency in the Declaration.

This case also confirms that, before a Corporation is able to amend its Declaration, it not only requires the support of 80% of the owners (90% is certain cases) but it must also ensure that individual owners are not oppressed or unfairly affected by the proposed changes. This is not to say that a single owner can oppose an amendment without valid reasons. Oppression still has to meet the test of whether the Corporation's actions unfairly disregard the interests of a minority of unit owner(s). What really concerned Justice Warkentin in this case was that the Applicants' property interests (for which they had paid a lot of money) were being fundamentally affected despite the fact that there was an easy solution to this problem that did not harm other owners.

Gowlings' lawyer, D. Lynne Watt, acted for the successful Applicants in this case. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions