Individuals who buy condominiums have expectations about condominium life. They expect carefree living in a well-run building, and rightly so.
A condominium corporation's board of directors bears the responsibility of ensuring that the building runs smoothly, that building systems are maintained, that repairs are addressed promptly and that everything is done within a fixed budget. Unfortunately, board members sometimes do not have enough time to address every issue that is reported to them. Other times, board members do not have enough experience to make good decisions on technical matters. We often hear unit owners complain that their condominium corporation's board members are not fulfilling their duties, or, worse, are acting in a manner that is unfair. Owners are sometimes left feeling helpless and powerless when their corporation fails to address important issues.
The Condominium Act contains a powerful remedy to help unit owners who are being disregarded or ignored. The "oppression remedy" is found in section 135 of the Condominium Act, 1998. It permits the owner of any unit to apply directly to the Superior Court to ask for just about anything. The section empowers a judge to literally "make any order the judge deems proper", depending on the circumstances at hand.
Use of the oppression remedy by condominium owners has recently become more widespread, although the remedy has been available in Ontario since the current Condominium Act came into force in 2001. The oppression remedy was imported from business law and, in that context, it is considered to be one of the most powerful tools available to shareholders to remedy corporate wrongs.
So what exactly is oppression? When can owners benefit from this powerful tool? In short, oppression is an unfair breach of a unit owner's reasonable expectations. The oppression remedy is so broad that it allows any type of activity to be subject to judicial scrutiny.
While any unit owner can apply for relief from oppression, courts will only intervene if the legal criteria are met.
The Legal Test for Oppression
The test for oppression is two-pronged: applicants must establish both that the condominium corporation's conduct breached their reasonable expectations and that the resulting situation is unfair. The oppression remedy protects only legitimate expectations and not individual wish lists. Courts have decided that an owner's "reasonable expectations" are to be judged on an objective standard, which will depend on the context. Personal expectations are irrelevant. The judge hearing the matter will decide what is reasonable in the circumstances.
If a unit owner establishes that his or her reasonable expectations have been breached, the court will then consider the second part of the test. It will look at the conduct giving rise to the complaint and decide if it amounts to oppression.
There are three types of conduct which can give rise to oppression:
1) "Oppression" is conduct that is coercive or abusive. This type of conduct is described as burdensome, harsh and wrongful, or an abuse of power which results in an impairment of confidence.
2) "Unfair prejudice" is conduct that limits an owner's rights or interests in a manner that is unfair or inequitable.
3) "Unfair disregard" is where a board ignores or treats the interests of the owner as being of no importance.
A unit owner does not need to prove malice or ill-will on the part of a corporation. Oppression can be unintentional. For example, in the case of Grigoriu v. Ottawa- Carleton Standard Condominium Corporation No. 706, 2014 ONSC 2885 (CanLII), a condominium corporation amended its declaration to prohibit the use of parking units by non-residents. This change was made to address security concerns caused by non-residents accessing the parking garage. The change adversely affected the applicant, who owned a parking unit within OCSCC 706 and a residential unit in a neighbouring condominium corporation. The applicant was subsequently unable to sell his residential condominium unit (in the neighbouring corporation) because he was unable to sell his parking unit along with it. The judge hearing the application found that the amendment to the declaration breached the owner's reasonable expectation of being able to sell his residential unit with his parking unit and ordered a further amendment to the declaration to remedy the issue.
We recently assisted a unit owner bring an oppression claim against her condominium corporation. The owner's unit is on the highest level of a residential highrise building. The mechanical equipment servicing the entire building, located on the level above her unit, was causing noise and vibration to enter her unit. This began approximately six months after her purchase, in about September, 2008.
The owner immediately reported the problem to the Board of Directors and regularly followed up on the status of the matter. Approximately a year after the problem was first reported, the condominium corporation hired acoustical engineers who confirmed there was a problem and recommended remedial measures.
Over the next several years, the condominium corporation claimed it was working to address the problem. The unit owner did not see any improvement and did not believe that the corporation was addressing the problem.
Eventually, in March, 2013, the parties proceeded to mediation under the Condominium Act. At the mediation, the condominium corporation agreed to fix the problem. The condominium brought in acoustical engineers who confirmed that the problem persisted. Again, however, the condominium corporation took no significant steps to address the problem.
Like many disagreements within condominiums, there were a number of issues in dispute. The unit owner claimed the condominium corporation was withholding documents. Indeed the report from the 2013 sound test was withheld for three months during which time the condominium's board of directors edited and revised the report, conduct which one judge hearing this matter found to be "unsettling". The condominium corporation threatened to lien the owner's unit when she refused to pay $150 in copying charges for documents she had requested. And finally, the condominium corporation claimed it had done some "research" and determined that the layout of the unit breached a by-law of the City of Mississauga. At one point, the corporation advised the owner that it would not do any further work as a result of the by-law issue, which was frustrating for the owner because the unit had been altered from its original layout by a board member, before the owner's purchase.
The unit owner eventually brought an application to the court for relief from oppression. She claimed monetary damages and an order directing the corporation to take whatever steps were necessary to bring the level of noise and vibration within her unit to an acceptable level. The condominium corporation vigorously defended the application. It adjourned the application on two occasions and brought an unsuccessful motion to stay the application. When the matter was finally heard, the condominium questioned whether there was even a problem at all. It blamed the problem on the layout of the unit and claimed that the applicant was the only person who had complained, which was not the case.
After reviewing the evidence, the application judge found that the condominium corporation had breached its obligations by failing to repair and maintain the elevators. The judge held that the condominium had oppressed, unfairly prejudiced and unfairly disregarded the owner's interests. The judge ordered the condominium corporation to pay the owner $30,000 in damages and ordered the condominium corporation to return to court to provide details of what would be undertaken to fix the problem.
The full decision can be found at Wu v. Peel Condominium Corporation No. 245 (2015 ONSC 4101 (CanLII)). It should serve as a warning as to what can happen when board members disregard an owner's complaints and fail to address legitimate concerns.
Oppression is not a Defence
While the oppression remedy will protect owners from unfair conduct by their condominium corporation, it cannot be used to excuse bad behaviour. Oppression can be claimed only when an owner is bringing a claim to enforce a right. Unit owners cannot rely on oppression as a defence to a condominium corporation's attempts to enforce its Rules.
In Hakim v. Toronto Standard Condominium 1737, 2012 ONSC 404 (CanLII), the applicant owned a commercial van which was higher than the 1.9m height restriction for the parking garage. The condominium corporation prohibited the owners' van, as well as a number of other vehicles, from parking in the garage in order to prevent over-height vehicles from damaging overhead pipes. The owners brought an application for relief from oppression. They claimed they had been "subjected" to the parking rules and that enforcement of the parking rules was not in their personal bests interests.
The unit owners were effectively trying to use the oppression remedy as a means to exempt themselves from the parking restrictions. The judge hearing the matter found that the board's actions did not constitute unfair prejudice or unfair disregard of the owners' interests. A breach of an owner's personal interests does not necessarily amount to a breach of reasonable expectations.
The Condominium Act sends most disputes between owners and condominium corporations to mediation and arbitration. A claim for relief from oppression is one of few disputes that can be brought directly to court. Interestingly, the proposed amendments to the current Condominium Act do not include any changes to the oppression remedy provisions. Although Ontario plans to send most condominium disputes to be resolved by its condominium authority, it appears that owners will continue to be able to apply to the courts for relief when their condominium corporation is acting oppressively.
Previously published in Condovoice Fall 2015
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.