Canada: Oppression Remedies And The Condominium Property Act, 1993

As published by the Saskatchewan Trial Lawyers Association in the October 2023 edition of The Saskatchewan Advocate.

Condominium living presents a unique set of challenges. Unlike ownership of a separate, privately-owned dwelling, condominium ownership comes with a bundle of rights and obligations determined by statute and bylaws, which attempt to strike a balance between the interests of the individual unit owner and the interests of the collective unit owners.¹ The collective unit owners are tasked with voting in a board for the management of the corporation. These boards are often comprised of laypeople who are entrusted to manage the condominium and are required to make decisions for the benefit of the corporation and all of its owners.² But what remedy does an owner of a condominium unit have when they feel the decision of a board has been made in a highhanded and oppressive way?

The Oppression Remedy

Inherent in the condominium concept is the principle that the condominium corporation acts to promote the health, happiness, and peace of mind of the majority of the unit owners. In sharing common facilities, a unit owner must give up a certain degree of freedom of choice which he or she might otherwise enjoy in separate, privately owned property. Section 99.2 of The Condominium Property Act, 1993 (the "CPA") states:

Oppressionremedy

99.2(1) An owner, a corporation, a developer, a tenant, a mortgagee of a unit or other interested person may apply to the court for an order if the applicant alleges that the conduct of an owner, a tenant, a corporation, a developer or a mortgagee of a unit is or threatens to be oppressive or unfairly prejudicial to the applicant or unfairly disregards the interests of the applicant.

• On an application pursuant to subsection (1), if the judge determines that the conduct of an owner, a tenant, a corporation, a developer or a mortgagee of a unit is or threatens to be oppressive or unfairly prejudicial to the applicant or unfairly disregards the interests of the applicant, the judge may make any order the judge considers appropriate, including:

• an order prohibiting the conduct alleged in the application; and
  • an order requiring the payment of compensation

This provision of the CPA allows any of the above-mentioned parties to bring an application for an order prohibiting the alleged conduct and awarding damages because of the impugned conduct.

The Legal Test under Section 99.2

Oppression remedies are an equitable remedy that seeks to ensure fairness, giving a court broad, equitable jurisdiction to enforce not what is legal but what is fair³ when ensuring that a Board has followed its legislative obligations pursuant to the CPA. However, because oppression remedies are "fact-specific", conduct that may be oppressive in one situation may not be oppressive in another. The Courts have approved a two-part test for oppression remedy claims under the CPA. This testwas set out in Harvard Developments Inc. v Park Manor Condominium Corporation as follows:

1. The applicant must establish a reasonable expectation; and

• That the applicant's reasonable expectation was breached or threatened to be breached by conduct that was oppressive, unfairly prejudicial, or unfairly disregarded the interest of the applicant.⁴

An analysis of each prong must be conducted independent of the next. Only if the Court determines there is a reasonably held expectation by the applicant does it need to continue to the second prong of the test. The onus is on the applicant to prove oppressive conduct on all branches of the test.

When assessing the first prong, the Court in Metropolitan Toronto Condominium Corp. No. 1272 v Beach Development (Phase II) Corp. outlined the considerations to be made in the reasonable expectation context of condominium legislation:

"The concept of reasonable expectations is objective and contextual, taking into account the facts of the specific case, the relationships at issue and the entire context. The actual expectation of a particular stakeholder is not conclusive. The applicant must identify the expectations that were allegedly violated and establish that those expectations were reasonably held, based on factors that may include general commercial practice, the nature of the corporation, the relationship between the parties, steps that the claimant could have taken to protect itself, the fair resolution of stakeholders' conflicting interests and, importantly, representations and agreements."⁵

It is important to note that not every breach of a reasonable expectation warrants the application of the equitable remedy of oppression. Owner expectations which are to be considered are not those that an owner has as his or her own individual "wish list". They must be expectations which could be said to have been (or ought to have been considered as) part of the owners understanding within the contract of the bylaws, policies, and rule of the Corporation.

If and only if the Court has found the owner had a reasonable expectation will the Court conduct an inquiry to establish if the action or inaction falls within the concepts of oppression, unfair prejudice, or unfair disregard. Oppressive conduct is coercive, harsh, harmful, or an abuse of power.⁶ Unfairly prejudicial conduct does not include the exercise of bad faith but constitutes unfair or inequitable conduct that treats the applicant differently from those similarly situated.⁷ Unfairly disregarding the applicant's interests also does not include the exercise of bad faith but means conduct where the legitimate minority interests of the applicant are treated as being of no importance.⁸ Analysis of each category will be undertaken by the Court to determine if the impugned action was oppressive. As the Court considers whether the impugned conduct of the Board satisfies the second part of the test as described in Harvard Developments above, should the conduct be deemed oppressive, unfairly prejudicial or that the owners' interests were unfairly disregarded, then the test will be satisfied. The second part of the test is not cumulative. Should any part of the second part of the test be satisfied, that is sufficient for finding oppression.

Considerations for Owners

Owners or parties who advance oppression applications pursuant to the CPA must specifically scrutinize the actions complained of. Owners must know and comply with their bylaws, policies, and rules. A permission by omission argument pursued by an owner with respect to their actions in the corporation may not be endorsed by the Courts. Should the Board fail to immediately sanction an owner, but later properly address the behaviour that violates the bylaws, policies, or rules, this conduct by the Board likely does not give rise to an oppression application. Owners must also consider the factual matrix of the actions they complain of. For example, a "basic amenity" such as in-suite laundry in a free-standing home may not be considered the same in the context of condominium living and denial of the same may not be oppressive.⁹ The owners of condominium units have agreed to be bound by the bylaws, policies, and rules of the corporation for which they have chosen to live in. When an owner purchases a Condominium unit, they are taken to have agreed to have been bound by the bylaws, policies, and rules in place, as if they had signed a contract stipulating the same.¹⁰ Simply because an owner or party feels a decision by the board is not in their interest does not mean they have been oppressed pursuant to the CPA.

Considerations for the Condominium Corporation Boards

When making decisions, condominium corporations need to recognize the impact of the decisions they make, not only on the overall group of owners, but also the owners as individuals. The Board has a duty to act for the benefit of all owners and to enforce its bylaws, policies, and rules reasonably and with predictability. The Board has a fiduciary obligation to all owners to control, manage and enforce the bylaws. In making a decision, the board should avoid arbitrarily deciding issues and make decisions grounded in provisions of the CPA or their bylaws, policies, and rules. They should consider the impact on the minority of owners who may disagree with their decision and consider any reasonable expectation that may be held by the owners with respect to the decisions being made. Finally, they should work with the party who believes they have been oppressed to reach a resolution. Explanation of the decision-making and sound reasoning applied by the condominium corporation are a must to ensure decisions are understood.

Condominium living requires cooperation of all involved. Owners and their corporations must work together. Although there may be decisions made that not all agree with, not every act against an owner's interest will be deemed oppressive. Only if a legitimate and reasonable expectation is held by the owner or aggrieved party will the Court review if the action by the Board was oppressive under the CPA. Simply because an owner has a "wish list" of expectations, does not make them reasonable. Owners should be cognizant of the corporation's bylaws, policies, and rules when purchasing their units and be prepared to live within their bounds. Corporations should seek to avoid making decisions in a reflexive or punitive manner when making determinations regarding individual owners in the corporation. Condominium ownership is a unique investment, one in which all owners choose to jointly share expenses for the betterment and improvement of a jointly held asset. Failure to properly follow the rules and policies within the Condominium could lead to a devaluation of the asset and loss to the individual owner. By ensuring enforcement of the bylaws, policies, and rules in a reasonable and predictable way, owners can anticipate the reaction of the Board to their actions.

Footnotes

1. Goertz v. The Owners Condominium Plan No. 98SA12401, 2018 SKCA 41 (Goertz) at para 53

2. The Condominium Property Act, 1993, SS 1993, c C-26.1, s.35

3. BCE Inc., Re, 2008 SCC 69 at para 58

4. Harvard Developments Inc. v Park Manor Condominium Corporation, 2018 SKCA 81 (Harvard) at para 33; Also see Sopher v The Owners: Condominium Plan No. 82S15667, 2023 SKKB 143 at para 12 for a complete outline of the oppression remedy under the CPA.

5. Metropolitan Toronto Condominium Corp. No. 1272 v Beach Development (Phase II) Corp. 2010 ONSC 6090 at para 19.

6. Ryan v York Condominium Corp. No. 340, 2016 ONSC 2470 at para 78.

7. Sopher v The Owners: Condominium Plan No. 82S15667, 2023 SKKB 143 at para 12.

8. Ibid.

9. Ibid at paras 17-18.

10. Supra note 2, at s44 (3)(a) and (b).