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Owners vs developer
Tip Top Lofts— waiting past the statute of limitations
New owners in legal nightmare
Builder limits his liability for construction deficiencies
Buyer fails to close on a new condo
Another buyer fails to close on a new condo
Builder prevents lawsuit by installing new board
Condo suing over HVAC construction & installation defects
Reconnect the electricity to the groundskeepers cottage
Printing Factory Lofts—construction defects


TSCC No. 1789 v. Tip Top Lofts
Ontario Superior Court of Justice
Court File No:  CV-10-40592
Heard:              Justice M. Dambrot
Date:                02 December 2011

This is a motion for summary judgment brought by the defendants. They argue that the condo corporations claim was commenced after the limitation period expired.

Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.

In this case, it is clear that the condo corporation discovered all of the matters listed in s. 5(1)(a) by August 15, 2007, when the engineering company produced its audit identifying, describing and reporting on the deficiencies, including the five that are pleaded. It is also clear that the condo notified the defendants of its claim within the one year ONHWPA warranty period.

Costs
The judge granted a summary judgment to the defendants, and dismissed the plaintiff’s action. The defendants sought partial indemnity costs in the amount of $21,035.35. The condo corporation sought $66,266.69. The defendants shall have costs in the amount they sought: $21,035.35 all in, payable forthwith.

For a good description on what the condo corporation did wrong, read:
"Time is the enemy in new condo construction cases" in Chris Jaglowitz's
The Ontario Condo Law Blog

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City of Mississauga v. PSCC #833

2013 ONCJ 593
Ontario Court of Justice
Mississauga, Ontario
Justice of the Peace Richard Quon
Judgment rendered: 01 November 2013

A townhouse condo corporation was acquitted of the four charges under the Building Code Act but only after enduring an expensive trial and the townhouses still have not been repaired.

Read how the purchase of new condo townhouses turned into a legal nightmare for ten Mississauga families.

It would not be unreasonable for most people who have purchased a new home in Ontario, to rightfully assume that their new home would have been constructed properly and according to the minimum standards set out in Ontario’s Building Code; that their new home would have been fully and properly inspected by municipal building officials; and that it would have indeed passed municipal inspection and met those standards set out in the Building Code, before they were permitted to occupy and take ownership of that new home.

And, if there were to be any defects in workmanship or materials, unauthorized substitution of materials, or Building Code violations in the construction of their new home, which the purchasers happen to discover within one year after the date when the purchasers obtain the legal ownership and possession of their new home from the builder, then they could still make a warranty claim to the Tarion Warranty Corporation (“Tarion”), who administers the Ontario New Home Warranties Plan Act, to have those defects or problems repaired or fixed.
 
Unfortunately, this is not what had happened to the purchasers of the ten townhouses in a condominium development located at the northeast corner of Glen Erin Drive and Rogers Road in the City of Mississauga, which had been built and developed by an Ontario company named Real-T-Building Inc.

Instead of being able to quietly enjoy residing in their new townhouses, the purchasers, who had obtained legal title to their respective townhouses on August 14, 2008, have had to undergo immeasurable stress, turmoil, and frustration in their lives, since discovering that the builder-developer of their townhouse complex did not construct certain elements of their complex in accordance with the original construction drawings or architectural plans that had been approved by the City of Mississauga.

Three legal battles
Moreover, the purchasers have had to also collectively outlay substantial amounts of their time and money for legal and engineering consulting fees in taking on three legal battles related to the builder-developer’s unauthorized alterations.

Builder-developer
First of all, the purchasers have had to retain legal representation for their legal dispute with the builder-developer, who had not obtained municipal approval for those alterations before proceeding with constructing those elements that were not in accord with the approved plans, and who had also refused or were unable to change or fix those altered elements, so that the townhouse complex would comply with the approved plans.

City of Mississauga
For their second legal engagement, the purchasers have had to collectively defend against four Building Code Act, 1992 charges in respect to those unauthorized alterations made by the builder-developer that were laid by the City of Mississauga against Peel Standard Condominium Corporation #833, which legally is responsible for maintaining the buildings and common areas of their townhouse complex, and to which the purchasers are individual members of that condominium corporation.

Tarion
And, for their third legal battle, which also included an appeal to the Licence Appeal Tribunal, the purchasers have had to endure a long legal fight with Tarion, who had denied their claim under the statutory warranty program provided for new homes under the Ontario New Home Warranties Plan Act to have Tarion fix those unapproved and unpermitted alterations made by the builder-developer in the construction of the townhouse project.
 
Furthermore, the purchasers of those ten townhouses had been also allowed to occupy and take legal ownership of their respective townhouses before the City of Mississauga Planning and Building Department had done a final exterior inspection of the townhouse development because the builder-developer of those townhouses had never made such a request to the Building Department to conduct that final exterior inspection.

Those unauthorized alterations made by the builder-developer were eventually noticed by a City of Mississauga building inspector, but only after the purchasers had complained to and informed the City of Mississauga about those unauthorized alterations, which would have likely been discovered during a final exterior inspection.

Moreover, as of August 23, 2013, which had been the last day of the trial in regards to those four charges, the final exterior inspection had still not been done or undertaken by the City of Mississauga, despite the ten purchasers of those townhouses having physically occupied and living in their respective townhouses since the years 2007 and 2008, when they were permitted by the builder-developer to occupy their respective townhouses as tenants-at-will while waiting for the townhouse development to be legally created and registered as a condominium corporation.

More important, this final exterior inspection had not been done by the City of Mississauga before the purchasers had become the actual owners of their respective townhouses on August 14, 2008, which is the date that legal title to their respective townhouse units had been registered and transferred to them by the builder-developer.
 
Also, from the date the purchasers had been first allowed to live in and occupy their respective townhouses in 2007 and 2008 to the last day of the trial on August 23, 2013, the builder-developer has failed to provide certified “as-built” drawings from an architect or professional engineer to either the City of Mississauga or to the purchasers, which accurately reflects what had been actually constructed by the builder-developer in respect to that townhouse development.

What a mess. I hope they are successful in getting the builder and Tarion to repair their homes and pay all of their costs.

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Toronto Standard Condominium Corporation No. 2095
v. West Harbour City (I) Residences Corp
Ontario Superior Court—Toronto
Court File No. CV-12-453714
23 September 2013
Justice D.L. Corbett

The first phase of the West Harbour City project was completed and registered. During the project’s marketing period, the purchase agreements stated that the builder’s liability for deficiency claims in the units could not exceed the limits of the Tarion warranty set out in the Ontario New Home Warranties Plan Act.

After the condo corporation was created, the developer’s nominees controlled the board of directors. This builder’s board passed Bylaw #2 which repeated the builder’s limited warranty. This bylaw was registered so it gave notice to subsequent purchasers of the builder’s limited warranty.

Once control of the condo board turned over to the unit owners, the condo corporation went to Ontario Superior Court to set aside the bylaw and the agreement so that unit owners would be able to sue the developer for defects exceeding the Tarion warranty. The condo desired a court declaration that this by-law and the agreement between it and the builder was “void and of no force or effect”.

The judge ruled that the original board could enter into an agreement respecting construction warranties and deficiencies, and that this agreement may bind the condo corporation into the future. Therefore the application was dismissed.

The important point that the judge made was:
“The law recognizes that a pre-turnover board of directors, as proxy for the developer, does not owe fiduciary duties to individual unit holders. They do no more than organize the affairs of the corporation in the manner set out in the declaration, and as disclosed to unit holders at the time that they purchase their condominiums.”

So this confirms that the original board that runs a condo corporation until the turnover meeting does not operate in the best interests of the unit owners but in the interests of the builder. It is important that the turnover meeting be held as soon as possible so the owners can remove the builder’s board.

This judgment also points out that all purchasers must carefully read the sales agreements, disclosure statements, the condo’s declaration, bylaws and rules before signing the sales agreement.

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Skyrise Developments Limited v. Abrahams
Court File: No. 93-CQ-35193
Justice Davidson
Date: 1996-07-16

This is a court case that shows what can happen when a condo bubble bursts as it did in Toronto in 1990. The buyers who walk away, can be sued for all the developer’s costs.

Skyrise Developments was the developer and builder of the condominium project “Skyrise on Yonge”.

Abrahams agreed to by a unit for $354,500. A $10,000 initial deposit was paid and then there was a second deposit of $30,000.

The occupancy fee was $2,956.47 monthly and the occupancy date was finally scheduled for 09 May 1991. The defendant did not occupy the unit on the occupancy date nor did she pay any monthly occupancy fees.

Skyrise accepted the defendant's breach of the contract by letter dated 25 March 1992 and terminated the agreement and claimed forfeit of the deposits without loss of its right to claim further damages.

The real estate market was flat all of 1991. Up to early 1989 the plaintiff had sold over 100 units in Building A and 170 units by the spring of 1991. A total of 120 purchasers defaulted on either the occupancy date or on closing.

There were 204 suites in total in Building A and 208 in Building B.

As at May of 1991 approximately 50 units had closed in Building A. Thirty units had not been sold so the inventory in Building A approximated 150 suites and 30 units were sold in Building B but 15 purchasers had defaulted.

The appraised values of the unit were:
May 1991
$265,000
Sept 1991
$225,000
Aug 1992
$229,000

This latter date was the date of the agreement of purchase and sale with the new purchaser.

Skyrise was awarded his costs which were determined to be:
1.
The difference between the original price $354,500 and the resale price $229,000. $125,500.00
2.
The plaintiff is also entitled to occupancy fee in the sum of $2,956.47 per month from the occupancy date May 9, 1991 to the proposed closing date February 4, 1992. $ 26,131.38
3.
Taxes from February 4, 1992, the proposed closing date to September 18, 1992, the date of the closing of the subsequent sale. $ 1,496.12
4.
Common expenses of $320.64 per month from May 9, 1991 to September 18, 1992. $  2,389.24
5.
Interest at 10% on the unpaid balance due on closing of $48,625 from May 9, 1991 to September 18, 1992. $  6,633.36
6.
Interest at 10% on what would have been the first mortgage of $265,875 from the closing date, February 4, 1992 to September 18, 1992 $ 16,461.84

Defendant to be credited with the deposits. -$ 40,000.00

Total judgment $138,611.94

The plaintiff was also entitled to prejudgment interest at 10% per annum on the amount of the judgment from September 18, 1992 to the date of judgment.

The developer also got court costs

So if we experience a similar collapse in the market, how many buyers will walk away? The second question is will condo prices drop by a third like it did in this development in 1990-1991?

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Reliance Properties (Coal Harbour) Ltd. v. Austin
The Honourable Madam Justice Bruce
Docket: S116619
Registry: Vancouver
Date: 20130614

In the spring of 2008, Lawrence Austin signed an agreement to buy a condo at 1499 West Pender. He agreed to pay the developer $2.71 million for the 25th floor Coal Harbour condo, and he put down a 10% deposit of $271,000.

But within a few months the global real estate market had crashed and Austin began looking to get out of the deal.

He argued that at the time of the sale he had made an oral agreement to be able to assign the pre-sale agreement to another buyer, regardless of price. But the developer told him his pre-sale agreement restricted him from assigning it to another buyer for less than the purchase price.

Austin then tried to get out of the contract by arguing that the developer failed to give him a copy of the original disclosure statement before he signed the contract, as required by law. The developer disagreed.

In the winter of 2011 when the building was completed, Austin didn't pay the balance of the purchase price. Six months later, the developer sold the unit for just over $2.05 million and sued Austin for the difference in price, minus his deposit.

Justice Catherine Bruce dismissed Austin's claims that he had not received the disclosure statement, noting he had signed a statement saying he had received it at the time he inked the deal.

She also found nothing to support Austin's claims that he had an oral agreement with the developer permitting him to assign the pre-sale agreement without the developer's agreement.

The justice ordered Austin to pay the developer nearly $500,000 to cover the difference between the pre-sale and final sale price, minus his deposit.

Austin was also ordered to pay the maintenance fees and property taxes for
the six months it took the developer to sell the condo. That came out to $753,000 plus the developer's legal costs which is almost three-times the cost of his original deposit.

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Middlesex Condominium Corp. No. 643 v. Prosperity
Court File No: 13-1578
Superior Court of Justice–Ontario
Before: Justice A. J. Goodman
Date: 28 February 2014

This is a motion brought by the respondent, Prosperity Homes Limited, for an order requiring the applicant, MSCC #643, to call a meeting of the owners to elect a new board of directors pursuant to s.152(6) Condominium Act, 1998.

MSCC # 643 is a 33 unit townhouse complex in London located at 1853 Blackwater Street. Prosperity Homes Limited is the developer.

The condominium townhouse complex was constructed by Prosperity
in three phases:
Phase
Size
Date
Phase 1
15 units
28 December 2006
Phase 2
10 units
25 February 2010
Phase 3
08 units
08 March 2011

Upon the completion of each phase, the condominium declaration was amended and registered on title. There were two declaration amendments and the second amendment restored Prosperity’s majority of ownership of the condo units in the complex. Prosperity still owns 19 units representing 57% of the total number of units in the condominium.

Performance audit
In June 2011, the condo corporation retained Coulter Building Consultants to conduct a performance audit on the common elements. Coulter concluded that the weeping tiles that were installed on all four sides of each block of units had been infiltrated in varying degrees by silt because it was not properly designed for the soil conditions on the property.

The condo corporation notified Prosperity of the deficiencies in the weeping tile system. Initially, Prosperity refused to take steps to rectify the deficiencies. The board of directors authorized the condo’s lawyers to file warranty claims with Tarion, but there was no warranty coverage for 25 of the 33 units.

Prosperity retained a firm of consulting engineers, EXP Services Inc. Initially, EXP, agreed with the condo’s engineers that a complete replacement of the weeping tile system was “the best technical solution” compared to any other solution that would “only be a short term measure”.

Eight months later, EXP modified its opinion and provided a scope of work for the 3-sided solution. EXP then indicated that a 4-sided solution was “not recommended” because of limited access to the front of the units since there was landscaping and garages at the front of the units.

Condo sues the developer
In November 2011, the condo initiated an action against Prosperity and six other defendants for damages resulting from the deficiencies in the weeping tile system. The condo sought damages of $750,000 alleging negligence arising from building construction resulting in “water entry” and “leaks”.

The condo’s engineers have maintained that the weeping tile system installed by Prosperity is defective on all four sides of the units. They have indicated that the 3-sided solution proposed by Prosperity is a “compromise solution”, and does not meet the “requirements of the Ontario Building Code, and it has a “high probability of failure” over the coming years.

 On 23 July 2013, the condominium held its AGM. Engineers attended on both sides to speak about foundation wall drainage issues. Greg Brophey, President of Prosperity also attended the meeting as Prosperity still retained ownership of 19 units representing 57% of the total number of units in the condominium.

Subsequently, a motion was brought seeking unit owner approval to borrow $500,000 to pay for the drainage repair that had been recommended by the condo’s engineering consultant. Prosperity cast its 19 votes against the borrowing by-law.

Developer takes condo to court
Prosperity submits that it is entitled, as declarant and majority unit owner, to call for the meeting pursuant to s.152(6) of the Act. The condo corporation is obliged to obey the statute notwithstanding Prosperity’s January 2014 requisition of a meeting of the unit holders pursuant to s.46(1) of the Act.

MSCC #643 further submits that it would be unjust to grant Prosperity’s request for the meeting at this juncture. Prosperity has acknowledged that its main reason for requesting the meeting is so that it can make the repairs to the weeping tile that it deems appropriate.

MSCC #643 claims that it is an attempt to avoid the consequences of its negligence and frustrate the condo’s attempt to recover damages for that negligence in the Action commenced against it. There is no guarantee that Prosperity will not have the Action dismissed or otherwise resolved on terms that are favourable to it and detrimental to the other unit owners. The 3-sided solution is not a full repair and will only lead to further problems for the unit owners in the future, once Prosperity has sold its units and moved on.

The condominium submits that this proceeding was commenced almost three years after Prosperity became the majority owner. The only reason Prosperity is seeking the meeting now is to elect a “Prosperity Board’ so it can terminate the litigation between the parties on terms that are favourable to it.

The judge stated that it was not lost on him as to the impetus and driving
forces behind Prosperity’s request for a s.152(6) meeting. Effectively, Prosperity wants to oust the current members of the board of directors in favour of replacing them with their own representatives who would likely be favourable to its position with respect to the remediation work required and the ongoing litigation.

Prosperity submits that there is no limitation period applicable in this case. 

Oppression remedy
As a second argument, the condo wanted an oppression remedy to sustain their opposition to Prosperity obtaining a new election.

Section 135 of the Act permits an owner, corporation, declarant or mortgagee to commence an application to the court for an order that the conduct of an owner, corporation, declarant or mortgagee of a unit is or threatens to be oppressive, unfairly prejudicial to the applicant, or unfairly disregards the interests of the applicant. The court may make “any order the judge deems proper”, including an order prohibiting the conduct referred to in the application.

MSCC #643 submits that this motion is a further example of the oppressive conduct of Prosperity toward the other unit owners. Greg Brophey acknowledged during his discovery examination that if the meeting is held he intends to elect directors to the board who will carry out his 3-sided solution.

Once elected, it is argued that those directors could do irreparable harm to the other unit owners and the condo as a whole. They could settle with Prosperity on whatever terms they deem appropriate. They could charge all of the costs back to the other unit owners.

It is obvious that a significant conflict of interest will exist if Prosperity is able to control the condominium’s board. In response Prosperity submits that they will effect the 3-sided remediation with the provision of a five-year warranty and stay–not seek dismissal of the action.

Test for oppression
The test for oppression has two parts. The claimant must demonstrate that there has been a breach of its reasonable expectations and that the conduct complained of amounts to “oppression”, or “unfair disregard” for the reasonable expectations of the claimant.

Indeed, current members of the Board may be replaced, litigation may be stayed, and remediation efforts may proceed against the wishes of the minority.

Nevertheless, the judge was not satisfied on the material filed that such control will result in further conduct that is oppressive, unfairly prejudicial, and disregards the other unit owners.

Conclusion:
The declarant should not have been forced to come to court in order to have the meeting called. It is ordered that a meeting pursuant to s.152(6) of the Act shall be called at the request of the moving party declarant no earlier than 30 days from the release of this decision.

Costs
The issues in this case including that of the interplay of the declarant’s rights under s.152(6) of the Act and the provisions of the Limitations Act, 2002, other statutory provisions, or estoppel principles is novel. Given that there has been no previous judicial consideration of this particular issue, and considering the circumstances and relationship of the parties to this motion, it was the judge's view that each side should bear its own costs.

Editor’s comments
It is surprising that the developer still owns most of the townhouses for such a long period of time. I found none for sale on the MLS site but several for rent on the Internet. It is reasonable to assume that the developer will retain control of the board for some time.

The developer will install a friendly board and will replace the weeping tiles on three sides, while the front side, the expensive one, will not be replaced. Will this cause a problem down the road, it is hard to say but it should be a concern to all present and future owners.

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PSCC No. 837 v. Davies Smith Developments Inc
Superior Court of Justice—Ontario
Court File No: CV-14-509727-00A2
27 October 2016

The Solstice, at 225 Webb in Mississauga, is a 38 floor condo that was built in 2008 and registered in 2011.

It is suing the vendor, the builder and five third parties because the condo corporation claims that there are deficiencies in the construction and installation of the heating, ventilation, and air conditioning (“HVAC”) riser piping system in the condo tower.

The Defendants and the third parties brought a motion for a summary judgment dismissing the Claim on the ground that it is barred by the limitation period.

The Statement of Claim was filed August 5, 2014. The Respondents claim that the condo corporation knew of their alleged HVAC problems prior to August 5, 2012 and as early as November 30, 2011.

The condo claims that the defects could not have been discovered until there was substantial failure of the riser piping system and a confirming expert’s report that was obtained on November 5, 2013. Up until then, they thought that there was only a few random leaks. This is when they first realized that there was an inappropriate installation of the HVAC riser piping throughout the building.

The judge ruled that there appears to be a genuine issue requiring a trial. The evidentiary record does not provide sufficient evidence to fairly and justly adjudicate the dispute, because of the lack of required explanatory expert evidence.

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1502 Lakeshore Oakville Holdings v. HSCC No. 634
Superior Court of Justice
Court File No: CV-16-558688
Before: Justice Firestone
Date: 12 December 2016

The developer  brought an urgent motion for injunctive relief on short notice requesting that the condo corporation and their property management company, Dove Square, reconnect the electricity to the Groundskeepers Cottage and an interim and interlocutory permanent injunction restraining the condo corporation from disconnecting the electricity to the cottage. Plus the developer wanted costs.

This matter was heard on August 17, 2016 by way of a case conference (chambers appointment) where both parties came to an agreement on everything but costs.

Costs
Costs are within the discretion of the Court.

The developer wanted costs on a substantial indemnity basis in the amount of $39,372.40. HSCC No. 634 argued that the costs sought by the developer were excessive and that each party should bear their own costs. Alternatively the condo submitted that if the developer was entitled to costs such amount should not exceed $5,000 for fees, plus HST and disbursements of $645.13.

The judge agreed agreed with the defendant that this was not a complicated matter and that costs payable on a substantial indemnity basis are not warranted. He further further accepted that there is some duplication of effort and that the costs sought are excessive.

The condo corporation had to pay $9,995.00 to the developer within 30 days.
(On top of these costs, the condo corporation would have had to pay their own legal costs plus the disconnection and reconnection of the electricity.)

Gatekeepers cottage?
This condo corporation was built as: The Gardens of Edgemere, at 1502 Lakeshore Rd E  Oakville. It consists of 18 townhouses and several amenities as the developer shows on this site map.

At the east entrance, both the carriage house and the keeper’s lodge of The Gardens will be restored, with the keeper’s lodge being repurposed into a guest cottage for family and friends.



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TSCC No. 2073 v The Printing Factory Lofts Inc
Superior Court of Justice—Ontario
Court File No: CV-12-453495
Before:      Master D. E. Short
Released:  21 October 2016

There are two interesting rulings in this case. The first one is:

"The law has now progressed to the point where contractors (as well as subcontractors, architects and engineers) who take part in the design and construction of a building will owe a duty in tort to subsequent purchasers of the building if it can be shown that it was foreseeable that a failure to take reasonable care in constructing the building would create defects that pose a substantial danger to the health and safety of the occupants. Where negligence is established and such defects manifest themselves before any damage to persons or property occurs, they can be held liable for the reasonable cost of repairing the defects and putting the building back into a non-dangerous state."

The second issue was that TSCC No 2073 wanted to add an additional contractor to the Application. The judge found
that this claim was statute barred as it was made three years after the condo corporation would have known that the company was a contractor.

TSCC No. 2073 v. The Printing Factory Lofts Inc & others
Divisional Court
Divisional Court File No: 552/16
Before:      Justice Nordheimer
Heard:       10 May 2017

Endorsement
The appellant, Toronto Standard Condominium Corporation No. 2703, appealed from the Order of Master Short, dated October 21, 2016, that denied the appellant leave to amend its Statement of Claim to add the respondent, Blackwell Bowick Partnership Limited, as a defendant. The appeal was denied.

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