Condominium's Irregularity in Notice Under s.23, Curable
The long-awaited challenge to the precedent set in York Condominium Corp. No. 46 v. Medhurst, Hogg & Associates Ltd. et al. (1983), 41 O.R. (2d) 800 (C.A.) has been delivered by a unanimous five-member panel of the Court of Appeal. In its decision released January 31, 2020, the Court of Appeal held that a condominium corporation's imprecise compliance with the notice provisions of section 23(2) of the Condominium Act, 1998, S.O. 1998, c19, does not make the action a nullity.
The Court held that non-compliance with s.23(2) of the Condominium Act is not a defence available to outside party defendants, but a procedural irregularity that is curable by those persons the Act was intended to protect. The Court of Appeal affirmed that the Act was consumer protection legislation.
Section 23 of the Act requires a condominium corporation to give written notice of the general nature before commencing an action by the corporation for damages and costs in respect of any damage to the common elements, the assets of the corporation or individual units, to all unit owners and all other interested parties on the record of the corporation required by section 46.1 (usually unit mortgagees).
The issue of notice was most recently ventilated in the 2016 case of TSCC 2130 v. York Bremner Developments Limited, 2016 ONSC 5393, 75 R.P.R. (5th) 243, where Mr. Justice Myers, in holding the action was a nullity for the condominium corporation's failure to give notice, commented he was bound through stare decicis by the Medhurst decision and that it was for the Court of Appeal or Supreme Court to decide otherwise. York Bremner ultimately settled without an appeal decision, leaving the Medhurst question unresolved.
In York Region Standard Condominium Corporation No. 1206 v. 520 Steeles Developments Inc. et.al. 2020 ONCA 63, the Court of Appeal, exercised its rarely used discretion and overruled Medhurst.
Medhurst was decided 37 years earlier, by the same Court in a brief decision, affirming it was settled law that non-compliance with the notice provision of s.14 of the Condominium Act, 1978, S.O. 1978, c. 84, (which is the precursor to s.23 of the current Act), rendered an action for damages by a condominium corporation a nullity on the grounds that the then Condominium Act did not provide a remedy for noncompliant actions.
In 2020, the Court of Appeal held that Medhurst had been superseded by subsequent Supreme Court of Canada jurisprudence and generated too harsh an effect which was unconnected to the purposes underlying the Condominium Act, namely consumer protection.
The Background in YRSCC 1206
The Condominium Corporation had authorized the issuance of a Notice of Action for construction defect claims and shortly thereafter provided a copy of the draft Statement of Claim to all owners for approval at the AGM. Approval was obtained and the Statement of Claim filed immediately thereafter. One defendant pleaded in its defence that without strict compliance with the s.23 provisions, the action was a nullity. That defendant moved for summary judgment.
In disposing of the defendant's summary judgment motion in YRSCC 1206, Mr. Justice Faieta held against the applicant, finding, inter alia, that the Condominium Act and the Rules of Civil Procedure are not in pari materia, to the extent that the meaning of the word "commence" in the Rules was not applicable to the Condominium Act. Of note, Justice Faieta also held that discussions by counsel of potential litigation at an earlier Special General Meeting, which included a carried motion that counsel act to protect the Condominium Corporation's rights, was not adequate notice under s.23(2).
In his reasons, Justice Faieta found, that for the purposes of the Condominium Act, the Action was commenced with the filing of the Statement of Claim rather than the issuance of the Notice of Action. The Court of Appeal disagreed and held that there was nothing in the wording of the Condominium Act that changed the meaning of the word "commence" in the Rules of Civil Procedure for the purposes of s.23(2).
The Court of Appeal held that the nullity consequence required by Medhurst had been superseded by modern jurisprudence on the interpretation of statutes which weighed in favour of overruling it. It also held and that the administration of justice would hardly be served by upholding the precedent in Medhurst simply because it predates the modern emphasis on the interpretation of statutes. Ultimately, the Court held that non-compliance with s.23(2) was a procedural defect and only an irregularity that was cured by the Condominium Corporation at the AGM. The Court adopted the analysis in Blueberry Indian Band v. Canada  4 S.C.R. 344 to determine the effect of a defect based on two key factors, namely the object of the statute and the effects of a ruling one way or the other. In the absence of clear direction from the legislator, courts generally will favour an interpretation that permits procedural irregularities to be cured. The Court held that a resultant nullity for non-compliance with s.23(2) is not called for by the text of this provision of the Act, is wholly inconsistent with the Act's purpose, and can lead to substantial injustice. Section 23(2) was intended to protect unit holders and not intended to be used as a defence by outside parties. In so holding, Medhurst was inconsistent with binding Supreme Court jurisprudence regarding the modern approach to statutory interpretation and the concept of a statutory nullity.
The Court stated:
Finding that non-compliance with s. 23(2) results in a nullity would undermine rather than support the purpose of this legislation. The section is meant to regulate the relationship between the condominium corporation and the condominium owners, not the relationship between the condominium corporation and third parties. Third parties should not be able to escape liability to the condominium owners because of a failure of the condominium corporation, acting on their behalf, to properly notify the owners. Nullity leads to this perverse result by allowing third parties to raise the procedural defect for their own benefit. It is perverse to allow the provision to be used to the prejudice of the condominium owners it was meant to protect.
The two main takeaways from the Court of Appeal are as follows:
1) Non-compliance with s.23(2) of the Condominium Act is not a defence available to outside party defendants, but a procedural irregularity that is curable by those persons the Act was intended to protect; and
2) the Notice of Action is the commencement of an action unless the applicable Act states otherwise.
It will be for another author to discuss the nature of the Writ of Summons that Justice Gray was ruling upon in Medhurst, under the 1978 Condominium Act, and the impact of nullity in an era of 6-year limitation periods and the old Rules of Civil Procedure.
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