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Court cases—shared facilities

Shared facilities can be a real headache for the different condo corporations who have to share the land, amenities, roadways, parking garages and whatever else is being "shared"—along with the associated costs—as these cases make so clear.

Shared facilities puts lien on all 112 condo units
Two condos with shared management office
Refusal to pay shared facilities costs
Small claims squabble between two condos with shared facilities
Commercial unit owner sues residental condo corporation over easement
Condo will not pay for use of shared laneway


TCECC No. 2041 v TSCC No. 2051
Ontario Superior Court of Justice
Court File #: CV-13-493321
Justice D.L. Corbett
Date: 30 June 2015

This is an interesting case for a couple of reasons. First of all, it deals with a dispute between a common elements corporation and a standard condo corporation of 112 stacked townhouses.

Something that should worry all condo owners that have shared facilities is that the law firm for the common elements corporation put a lien on all 122 stacked townhouses.

The TCECC
The common element condo corporation was made up of 31 parcels of tied land (POTL). One parcel was the land associated with the 112 stacked townhouses situated on the south side of a private laneway and the other 30 parcels were for 30 freehold townhouses that sat on the north side of common laneway.


As the sales pitch stated:
"Even the best cities must deal with Mother Nature. Georgian Corporation has created Clairlea with a  private lane which means that it will always be professionally maintained and cleaned by your condo corporation so your family and friends can come and go with ease all season long."

TSCC 2051 is a stacked townhouse condo with 112 units; TCECC 2041 is the common elements corporation for both the land on which TSCC 2051 sits, and the land holding the 30 freehold townhomes.

TCECC is responsible for snow clearing, landscaping, visitor parking, and related services. TCECC has the duty to budget for and collect common expenses from all of the unit owners (condominium units as well as townhomes) and to deliver financial statements.

From 2009 to 2013 TCECC, controlled by the developer, provided some services, but failed to assess and collect common expenses from the stacked townhouses. When TCECC realized its error, it had financial statements prepared and tried to collect common expenses back to 2010, including interest at rates set out in the Condominium Act. In this action they claim $127, 500 of which about $50 000 is accrued interest.

Ruling
"TCECC’s claims for expenses and set-offs arising prior to November 1, 2011 are dismissed and its claim for interest accruing up to November 1, 2013 is dismissed;

The balance of the issues on the application are to be pursued through the mediation/arbitration provisions of the Condominium Act, with an effective commencement date of those proceedings being the date this application was commenced for the purposes of interest accruing from November 1, 2013, and for the purpose of limitations issues;

The balance of the application is dismissed."

So the TCECC could not use Section 134 to revive stale lien rights so it would have to use a court action or arbitration to recover its unsecure claim. Such a claim falls under a two-year statue of limitations.

Why lien all the units?
"Technically it is possible for TCECC to assert its claims against each of the 112 owners individually – just as it is possible to name the individual partners of a partnership rather than just naming the firm. But what is the point?  The claim is the same. Aside from the s.85 lien, the remedy is the same. But placing a s.85 lien against each of 112 units is expensive. I agree that this is “a powerful remedy”. But why use it here if not solely for the purpose of making the proceedings expensive and cumbersome?

I agree with the respondents that the appropriate responding party is TSCC."

A punitive rate of interest
"Arrears for the period 2011 to 2013 will be subject to interest accruing starting in November 2013, when the applicant commenced this application. The rate to be applied to these arrears will be in the discretion of the mediator/arbitrator, such discretion to be exercised on the usual factors, including, if necessary, relief from forfeiture to relive from a punitive rate of interest if the circumstances so warrant. By way of example, and without limiting or binding the mediator/arbitrator, to the extent that it may appear that the applicant has failed in its duties to document and account for common expenses, or has otherwise conducted itself in a manner that precipitated conflict over the quantum owed for these expenses, it may be appropriate to award interest at the Courts of Justice Act rather than at some higher rate.

As for the future
“As a final note, the parties should bear in mind that they are in a long term relationship and need to deal with each other fairly and reasonably.”

Well, if it was the developer who triggered this court application, then the judge was mistaken in their being a long-term relationship—aside from lawsuites as I understand there is another superior court case scheduled for a late January 2016 hearing—as the reason developers build condos is so they get their money up front and then they run.—editor


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PSCC No. 935 v PSCC No. 938
Ontario Superior Court of Justice
Court case #: CV-13-494886
Justice G. Dow
Heard: 27 August 2015

On 26 June 2015, PSCC # 935 (a condo tower at 365 Prince of Wales, Mississauga that is managed by Larlyn Property Management) sought summary judgment against PSCC # 938 ( a condo tower at 360 Square One managed by a different management company, City Towers) to make an earlier temporary injunction permanent plus plus damages in the amount of $150,000 plus interest and costs.

Phase 1 (PSCC # 935) was built first and included an “Amenity Unit” on the fifth level of the common area to both it and the later built Phase 2 (PSCC 938).

The Amenity Unit contained the property management office for both corporations. Until November 2013, both condos used the same property management company. However, at that time PSCC # 938 switched to a different property management company (and staff) and began sharing the management office facility.

On 09 December 2013, PSCC # 938 and/or its property Management unilaterally and surreptitiously switched the locks on the management office excluding PSCC # 935's management staff from their telephones, equipment, files and records which included confidential information.

What was contained in the office was not returned until 11 December 2013 and then only in part.

A Notice of Action was issued 16 December 2013 with an urgent motion prepared and served which resulted in the Order 23 January 2014 which has been in effect as of 28 January 2014.

The upshot is that PSCC # 935 received $50,000 including all damages, costs and interest plus an extra $3,400, the costs of this hearing.


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MCC No. 229 v. WMJO Ltd
Ontario Superior Court of Justice
Court File No: CV-10-1864
Justice L.C. Leitch
Date: 17 July 2015

The condo corporation seeks a finding that the defendants are liable to contribute to the operating and maintenance costs of a private sewage system.

The plaintiff contracts with a plumbing company for the required regular maintenance and cleaning of the pumps and tanks. Sludge must be removed from the tanks every three months. It arranges for repairs, pays the insurance, electrical and alarm system bills, and posts the performance bond required under the Ministry of the Environment certificate of approval. It invoices the owners of townhouse complexes whose units have been connected to sewage systems for their proportionate share of the expenses.

The condo corporation seeks a declaration that one or more of the defendants are jointly or severally obligated to contribute, on a pro rata basis, to the costs of maintaining and operating the jointly used sewer system.  In the alternative, the plaintiff seeks an order requiring the defendants to pay to the plaintiff the equivalent of 26.92% of the plaintiff's expenses to operate the jointly used sewage facilities from 2008 until the disposition of this action.

Unjust enrichment
WMJO was enriched, as it saved considerable expense by connecting into MCC 229’s sewage system rather than having to construct one to service the units it owned.

MCC 229 suffered a corresponding deprivation as it was operating and maintaining a sewage system that was considerably larger than required for its 43 units.

There was no juristic reason to permit the enrichment, such as, for example, an intention to make a gift or where a statute denies recovery.

The condo won.

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OCSCC No. 845 v OCSCC No. 919
Ottawa Small Claims Court
Court file #: SC-14-00133820
Deputy Judge P. Lepsoe

OCSCC # 845 sued OCSCC # 919 in Small Claims Court for $25,000. The two condos share common elements. No. # 845 sent a letter to # 919 stating that it owed # 845 money for common element expenses.

Neither side seemed to realize that there was an arbitration clause in their agreement. What followed was a squabble whether this dispute should go to arbitration or to small claims.

By the time the motion appeared in small claims, the two side had agreed to  proceed to arbitration, had agreed on the arbitrator, and agreed that the action should be stayed. The only issue was costs.

Costs
The defendant sought costs of $5,500. The judge awarded them $200.

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Vitz Holdings Inc vs TSCC No. 1530
Ontario Superior Court of Justice
Court file No: CV-16-566400
Justice: Justice Penny
Date: 14 February 2017

Plaza Suites    890 Sheppard Ave West

TSCC #1530 is a mid-rise condo corporation located at 890 Sheppard Ave West in Toronto. It has 97 residential units that occupy the top five floors of a six-storey building and its owns the underground parking garage below the building. The ground floor commercial units is TSCC #1529, a separate condo corporation. The two condos have a Shared Facilities Agreement.

TSCC 1530 granted an easement to the “owner(s)” of the commercial condominium (TSCC 1529), including the condominium corporation itself, to install drainage, sewer, water, insulation, electrical, telephone, cable, ventilation, air conditioning, fire protection, waste disposal and “similar systems or utilities”. The Easement extends to boring, crossing or penetrating all slabs, floor slabs, ceiling slabs, concrete, concrete block, masonry or drywall necessary to install the services.

A dentist (Vitz Holdings) bought a commercial unit with the intention of installing a dental office. He needed plumbing piping and electrical wiring run through the concrete slab. He got all the required drawings and worked with TSCC #1530's engineer to insure everything was in order.

The construction of the dental office in Unit 1 of TSCC 1529 required boring through the floor/ceiling slab on a portion of TSCC 1530’s premises to install toilets and sanitary drains, compressed air lines, vacuum lines, data and power wire conduit, heat tracing, pipe insulation and fire stopping.

However, TSCC #1530 claimed that because the dentist owns four parking spots in the underground garage, he is not covered by the the shared facilities agreement but instead, as an owner of TSCC #1530, Section 98 of the Condo Act provides that an “owner” may only make alterations to common elements if the board has approved the alterations

Justice Penny ruled in favour of the dentist.

Costs
Vitz Holdings sought partial indemnity costs of $13,237.17. The Applicant prevailed in these proceedings. It is entitled to its costs on a partial indemnity basis fixed in the amount of $9,000 inclusive of all fees disbursements and applicable taxes.

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TSCC No. 1633 v TSCC No. 1809 and Baghai Development Ltd
Ontario Superior Court of Justice
Docket: CV-10-411182
Justice P. J. Cavanagh
Released: 01 March 2017
 
This application was brought by TSCC 1633 by Notice of Application issued on September 24, 2010 against TSCC 1809 and Baghai Development Limited (“Baghai”).

1 Avondale Avenue

Background Facts
TSCC 1633, (1 Avondale Ave), and TSCC 1809 (16-18 Harrison Garden Blvd North York), are adjacent condominium developments. Baghai was the developer. TSCC 1633 was registered in 2004 and is comprised of two high-rise buildings containing a total of 611 residential dwelling units and 10 retail units. TSCC 1809 was registered in 2006 and is comprised of two buildings containing 179 residential dwelling units and 22 commercial units.
 
The registered declaration which creates TSCC 1633 and the registered declaration which creates TSCC 1809 provide that TSCC 1809 has an easement over TSCC 1633’s lands for the purpose of vehicular access, ingress and egress to the underground parking garage of TSCC 1809. Neither Declaration contains a reference to any cost-sharing and no reciprocal agreement or cost-sharing agreement was entered into between TSCC 1809 and TSCC 1633 governing the use and maintenance of the Easement or the Shared Laneway.
 
Any vehicle entering or exiting the underground parking garage for TSCC 1809 must drive over a portion of the Shared Laneway which also services six of TSCC 1633’s commercial units and their commercial visitors parking area. Residential unit owners of TSCC 1633 do not use the Share Laneway for accessing their underground garage. No part of the Shared Laneway is owned by TSCC 1809.
 
In March 2010, TSCC 1633 provided TSCC 1809 a draft cost-sharing agreement in respect of the Easement and advised that TSCC 1809’s share of the costs was 23.3 percent according to an engineer’s opinion. TSCC 1809 refused to cooperate.
 
TSCC 1633 then went to court to apply for a declaration and order that TSCC 1809 is responsible to share permanently the costs of operation, maintenance, repair and replacement of the shared laneway.
 
Analysis
TSCC 1633 relied upon four grounds in support of its application.
(a)
TSCC 1633 is entitled to a remedy founded in unjust enrichment.
(b)
TSCC 1809 is subject to a common law obligation owed to TSCC 1633 to maintain and repair the Shared Laneway.
(c)
It is entitled to a remedy under section 135 of the Condo Act on the basis that the refusal of TSCC 1809 to contribute to the costs of maintenance and repair of the Shared Laneway amounts to oppressive conduct.
(c)
The recent amendments to the Condo Act providing for cost sharing support the relief sought on this application. Among the amendments is the introduction of a requirement that two or more condominium corporations which share facilities enter into agreements in accordance with the legislative provisions.

The judge dismissed all of TSCC 1633’s arguments. There was nothing in either Declaration stating that TSCC 1809 would help pay for the laneways maintenance or repairs and there was no Shared Facilities agreement. The changes in the Act are not yet in force.
 
Disposition
For these reasons, the application was dismissed.

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