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Condos vs management
Eco-Concepts vs PCC #260 & PCC #257
Maple Ridge Community Management terminated
Maple Ridge Community Management using paralegals for liens
Win2 Management Inc. terminated
Orr vs MTCC 1056—Error on the status certificate
DMG vs TCECC No. 1702

EcoConcepts Management Services Inc. and
PCC No. 260 and PCC No. 257 and
Lorraine Tremblay, Neil Dixon, Gloria Duguay, Gerry Pickering and Agnes Oakley
Ontario Superior Court of Justice
CV-14 518666

I got interested in this court application after reading a status certificate for this Brampton condo tower. A condo being sued for an eye-popping $568,114 by the ex-management company deserves a close look.  A contractor walking away with a  $196,200 deposit  is equally  unusual.

EcoConcepts Management Services Inc Statement of claim
Claims against PCC No. 260
• $493,113.61 in damages.
• $75,000 in punitive and exemplary damages.
• interest from 19 August 2014 to date of payment or judgment.
• costs on a substantial basis.
• such further and other relief that the honourable court deems just.

Claims against PCC No. 260 and PCC No. 257
• $1,695.00 in damages.
• interest from 19 August 2014 to date of payment or judgment.
• costs of this action.
• such further and other relief that the honourable court deems just.

• EcoConcepts was the property manager for PCC No. 260 since the summer
   of 2004.
• Most recent contract was renewed starting 01 Dec 2013.
• It was unanimously approved and duly authorized by PCC No. 260's Board
   of Directors at a meeting on 03 Dec 2013 as evidenced by the minutes.
• The term was from 01 Dec 2013 to 30 Nov 2018. (Five years.)
• Compensation
"The manager [EcoConcepts] shall be annual fee of $100,000 for 01 Dec 2013–30 Nov 2014 and a 2 percent increase for years 2015, 2016, 2017 and 2018, excluding the HST."
• The termination clause
"In the event that the corporation [PCC No. 260] wishes to terminate the [Management] Agreement, it shall provide the Manager with sixty (60) days written notice and all payments in full of Manager's compensation for the remaining months of the term of this Agreement."

Termination clause was specifically discussed at the Board Meeting held on 03 Dec 2013, and referenced in the Minutes as follows:
"Discussion with the Corporation's lawyer agreed that the Board would guarantee cost savings over the course of 4 years...we agreed to continue with Eco Condo Management Services [sic] for 5 years no termination clause with cash out to be implemented."

On or about August 19, 2014 PCC No. 260 unilaterally and without advance notice or warning advised EcoConcepts that it was terminating the Management Agreement, effective immediately. There was four years and one month remaining under the term.

PCC No. 257
• EcoConcepts managed the shared facilities since the summer of 2004.
• The term of the Shared Facilities Agreement was extended from 01 Dec 2013
   to 30 Nov 2018.
• The Shared Facilities Agreement stated"
"The Manager [EcoConcepts] shall be annual fee of $10,170.00, including the HST for year 2014..."

• The Termination Clause states:
"In the event the Corporation [PCC 260] wishes to terminate the [Management] Agreement, it shall provide the manager with sixty (60) days written notice or payment in lieu of."

• on 19 August 2014 PCC No. 257 and PCC No. 260 terminated the Shared
   Facilities Agreement effective immediately.
• 60 days notice $1,695.00

The application was filed on 22 Dec 2014.

Defence and counterclaim
The most recent renewal of with which PCC No. 260 has no difficulty 01 Dec 2010 till 30 Nov 2013 continuing on month to month basis unless terminated. This agreement had a 60 day termination clause.

At the AGM 03 July 2014, several new members were elected to the board.

On 19 August 2014, the newly elected board resolved to terminate the plaintiff's services and gave 60 days written notice on or about that day. By letter, on 22 Aug 2014, counsel for the plaintiff demanded PCC No. 260 pay $499,000.

The new management agreement signed by the old board on Dec 2013 is substantially different than the 2010 agreement. It has a five-year term instead of three years. The new termination provision is extraordinary and is far beyond the 60 or 90 day industry standard. It is oppressive, unconscionable and improvident.

PCC No. 260 says that the Dec 2013 agreement was not approved at a duly-constituted meeting of its board and is consequently invalid. The Dec 2010 agreement therefore remains the operative agreement.

If the court finds that the board meeting held on 03 Dec 2013 was valid, PCC No. 260 states that the directors who approved or executed the Dec 2013 agreement were misled, poorly advised, negligent, improperly colluding with the plaintiff, or some combination thereof, in regard to the following points and others:
a.) That the revised termination clause was "industry standard";
b.) That the agreement would result in cost savings;
c.) That the five year term was prudent, justified or industry standard;
d.) That the deletion of the protective provisions in clause XIV(3) was prudent
      or justified, or even that such provisions were proposed to be deleted; and
e) That the revised agreement was recommended or approved by counsel.

The plaintiff and its principals owed and breached a duty to act in good faith towards PCC No. 260 by misrepresenting to PCC No. 260's directors the nature and effect of the proposed changes in the management agreement.

PCC No. 257
PCC No. 260 board did not have the authority to bind PCC No. 257.

Request the court dismiss the plaintiff's action with costs:
a.) Rescission of the contracts referred to in the Statement of Claim;
b.) Damages for breach of contract and negligence in the sum of $500,000;
c.) Interest;
d.) Costs;
e.) Such further and other relief that the court finds...

Throughout its tenure as PCC No. 260's Manager plaintiff and its principal, Leonora Frangella, actively managed other condo corporations often from PCC No. 260 management office and using equipment and materials belonging to or paid by PCC No. 260. Work done during hours that were suppose to be devoted to PCC No. 260's business.

List of complaints.
There was a long shopping list which included:
• issued a cheque for $196,200 to a contractor as a deposit on hallway
• Performed many services in a negligent manner.
• Poor bookkeeping and accounting.
• improper crediting common expenses.
• poor customer service.
• loss of priority over common expense arrears
Costs and economic damage all estimated to be over $500,000.

Filed: 06 Feb 2015

Plaintiff's counterclaim

The Management Agreement was executed on or about 01 Dec 2013 unanimously approved and duly authorized by PCC No. 260's board at a properly convened meeting and evidenced by minutes.

The management Agreement was not drafted by EcoConcepts.

Other contractors received similar contracts: "ie upon termination payments are to continue for the balance of the term."

EcoConcepts never got written notice of termination.

EcoConcepts denies colluding with any members of the board and cannot be held liable for the alleged bad decisions of the board.

Despite best efforts neither EcoConcepts nor Frangella have found comparable employment.
Plaintiff denies counterclaim and requests it be dismissed with costs on a substantial indemnity basis.

Filed 02 March 2015

3rd parties
On 31 August 2016, the third parties (old board) advised the other parties that they have changed law firms.

This application was heard on 02 February 2017.

Court File No: CV-14-518666
Heard: February 2, 2017
Date:  05 April 2017
Justice W. Matheson

The court decision was released on 05 April 2017. The judge included the following in his judgment.

In short, these proceedings arise from discord within the condominium giving rise to a change in the board membership, the termination of the plaintiff’s management contract and related disputes. Serious allegations are made, including the alleged fabrication of documents.

By 2013, the plaintiff’s management of PCC260 had become a source of significant discord. Some owners were very unhappy with Ms. Frangella. Opponents of the old board formed an advocacy organization called The Home Owners’ Association in order to mobilize support among the owners and effect change. An attempt to remove the old board in mid-2013 did not succeed.

At the end of 2013, the management contract was due to expire. Ms. Frangella was concerned that a new board might terminate her contract. In late 2013, Ms. Frangella approached the old board, expressed her concerns, and requested a new, longer-term contract.

At PCC260’s annual general meeting in July 2014, several members of the board were replaced and a new board took over at PCC260. The new board discovered the 2013 Agreement. It was terminated, and PCC260 has refused to pay the almost half million dollar termination fee.  

There is considerable dispute about the events surrounding the entering into of the new agreement. The new agreement, dated December 1, 2013 was for a five-year term and a similar annual fee, although now increasing annually. Most significantly, the agreement had a different termination clause. The clause that is the focus of this litigation provided that on terminating the agreement, PCC260 was required to pay out the remainder of the five-year term.

There are significant factual disputes regarding the events surrounding the entering into of the 2013 Agreement, especially the old board’s process, including the following:
why the termination clause requiring payment for the balance of the term was included in the 2013 Agreement (without being requested by the plaintiff) and, in that regard, whether the payment was inserted to make it difficult for a new board to remove the plaintiff as the property manager;
(ii) whether the 2013 Agreement was properly authorized at a meeting of the old board, including:

(a) whether there was a meeting at all, given that the document put forward as the minutes is in a different [sic] from the prior forms of minutes and was purportedly not stored with the other minutes, among other things;

(b) why the minutes contain more detail and are potentially inconsistent with  the handwritten notes put forward as the notes of the meeting, especially given that the person who was said to have prepared the minutes was not at the meeting;

(c) why the handwritten notes of the meeting were apparently altered with liquid paper;

(d) why the minutes were apparently not approved at a subsequent board meeting;

(e) if there was a meeting, what transpired, given the differences between the minutes, the document put forward as the notes of the meeting and the recollection of various board members;

(f) whether the old board obtained competitive quotes for property management services and whether they were discussed;

(g) whether the old board obtained and relied on legal advice about the above termination clause;
(iii) the extent to which Ms. Frangella was personally involved in the old board’s process, which it appears she may have been, and with what effect;
(iv) why the 2013 Agreement was not disclosed to unit holders in the ordinary course; and,
(v) whether the old board acted honestly and in good faith and is therefore entitled to indemnification for whatever they did or did not do.

There is evidence on all of these issues, sometimes conflicting evidence, sometimes evidence with significant gaps and sometimes evidence from which one party or another asks for significant inferences to be drawn.

PCC260 delivered an expert report from Dean McCabe. In short, he opines that the termination provisions in the 2013 Agreement are “well outside of the norm in the condominium management industry in the GTA.” He further notes that the clause at issue is the most restrictive contract termination provision that he has ever seen in his long experience.

The statement of defence alleges that the 2013 Agreement was not properly authorized by the old board. Further, it challenges the new termination provision, seeking relief against penalties under s. 98 of the Courts of Justice Act. The statement of defence allows for the possibility that the plaintiff is owed a small sum for notice, but seeks equitable set-off of that sum as against amounts claimed in the counterclaim.

The counterclaim seeks rescission of the 2013 Agreement and the shared facilities agreement, as well as damages for breach of contract and negligence, setting out numerous allegations against the plaintiff with respect to the manner in which services had been provided to PCC260.

There is also a dispute about an agreement with Bristol Contracting to update the corridors at PCC260, entered into shortly before the change of governance at PCC260. There are issues regarding when the contract was signed, when the deposit of almost $200,000 was paid and what transpired at the board meeting including with respect to competitive bids. PCC260 seeks return of its deposit, but has commenced separate proceedings in that regard.

In the third party claim, PCC260 names five members of the old board as third parties and seeks contribution and indemnity from them in regard to the plaintiff’s claim, among other things.

The third parties submit that they were acting honestly and in good faith in respect of all relevant steps taken by them and, therefore, the claim for contribution and indemnity against them should be dismissed.

They also claim that if PCC260 does show fraud and succeeds in obtaining rescission of the 2013 Agreement, there would be no claim for contribution and indemnity.

(This is quite an argument. If Ms. Frangella wins, it's not their fault as they acted honestly and in good faith. If fraud is shown, (it's a civil case afterall) then Ms. Frangella loses, there is no payout so they're off the hook. I'm not sure about the court costs.

Move for summary judgment
Both the plaintiff and the third parties have moved for summary judgment. In the substantial record before me, in addition to documentary evidence and affidavits from numerous people, there are examinations/cross-examinations of ten parties/witnesses, as well as the expert report filed by PCC260 with industry evidence regarding the cost of management services for condos. 

These motions
The plaintiff’s claim requires that two main issues be addressed:
 (1) whether the 2013 Agreement was properly authorized by the old board, including the extent and nature of the involvement of Ms. Frangella in that process; and
(2) whether the termination provision is an unenforceable penalty in any event, and whether PCC260 should be relieved from it under s. 98 of the Courts of Justice Act.
The second motion, brought by the third parties, has as its central issue whether or not these former board members acted honestly and in good faith in the course of the events at issue, especially in entering into the 2013 Agreement.

The above issues require a determination of what transpired in the course of entering into the 2013 Agreement and why, among other things. The relevance of the disputed facts is amply demonstrated by the submissions made by the moving parties in their factums. The plaintiff relies on submissions that the old board “duly authorized” the 2013 Agreement. The third party members of the old board accept that the allegations of fabrication of documents, if proved, “clearly amount to dishonesty and bad faith” but strongly submit that the allegations are unfounded.

indoor management rule”
Under the Condominium Act, 1998, S.O. 1998, c. 19, s. 32, a condominium board cannot transact any business of the condominium except at a meeting of the board where a quorum is present. Further, the “indoor management rule” does not apply to condominium corporations because the Condominium Act is consumer protection legislation. The plaintiff is therefore not entitled to assume that the 2013 Agreement was properly authorized by the old board of PCC260.

There is considerable evidence before me regarding the relevant course of events, focusing mainly on the 2013 Agreement and the board process. Not surprisingly, some of the witnesses do not fully recollect what happened. And some of the alleged issues and inconsistencies put forward by PCC260 are, at best, trivial. However, the issues arising from the allegedly fabricated documentation about a board meeting regarding the 2013 Agreement, including the minutes and notes that have been produced, do give rise to significant factual issues. 

The third parties submit that there are innocent explanations for the various issues with this documentation. There may well be. However, considering all the evidence before me, I conclude that the necessary factual findings cannot fairly and justly be made on the written record on these motions. These factual findings are required not only for the rescission claim but also for the determination under s. 98 of the Courts of Justice Act.

PCC260 submits that if anything could be determined on these motions, it is that the termination clause in the 2013 Agreement is an unenforceable penalty. Certainly, the sum of almost half a million dollars does appear to be out of all proportion to any damages actually suffered by the plaintiff due to early termination of the 2013 Agreement.

There is also a potential issue about whether or not the termination clause in the 2013 Agreement is a penalty clause at all, rather than a forfeiture clause.  If it is a forfeiture situation, there must be a consideration of unconscionability and fairness. Again, this leads back to the disputed facts surrounding the allegedly misconduct, including the alleged fabricated documents.

There is also what appears to be an unusual situation in this case inasmuch as it was PCC260 (under the governance of the old board) that inserted the new payment obligation into the termination clause, not the plaintiff. Under its new board, PCC260 is now seeking discretionary relief under s. 98 of the Courts of Justice Act and must show why it should not honour its own clause. PCC260 points to the same alleged misconduct of the old board in this regard.

Bearing everything in mind, I conclude that the issues in these proceedings cannot fairly and justly be decided on the record before me.

I am not persuaded that it would be fair and just to evaluate credibility or draw inferences from the evidence in the written record that are necessary to decide this matter on the record before me, especially in the face of allegations of fabrication of documents and other dishonesty. I conclude that there are genuine issues that require a trial.

These motions are therefore dismissed.


Maple Ridge Community Management vs PCC No. 231
Court of Appeal—Ontario
Docket:  C59661
Date:     10 April 2015

This hearing was an appeal of a Divisional Court decision that would have had a small claims case that was lost by Maple Ridge sent back for a new small claims hearing.

Background Facts
The condo appointed Maple Ridge as the property management company for a term of three years, commencing 30 November 2012. Under the terms of the Agreement either party could terminate the contract upon 60 days written notice or pay in lieu of notice or, alternatively, immediately for cause.

The contract said that the condo could terminate Maple Ridge if the company was "insubordinate, reckless or grossly negligent in performing its duties".

In a Small Claims Court action, Maple Ridge sought damages from the condo corporation, alleging a breach of contract and contending that the condo corporation did not have cause to terminate so they were entitled to $8,303.24, the pay in lieu of notice .

The Trial Judge concluded:
[n]otwithstanding that the grounds relied upon by the defendant in terminating the agreement, may not have been sufficient individually to meet the tests outlined above, although in some cases I believe they were, I am satisfied that when taken together they are sufficient to constitute insubordination, recklessness and/or gross negligence entitling the defendants to terminate the agreement without notice pursuant to paragraph 16.5 (c).

He dismissed Maple Ridge’s claim.

Appeal to Divisional Court
Court File No: CV-13-39-00
Maple Ridge appealed to Divisional court in June of 2014.

Justice David L. Edwards ruled that the small claims judge states that a number of actions or omissions could amount to insubordination, reckless or gross negligence, namely: continuing to issue incorrect status certificates; delays in preparing banking documents for signature, coupled with late payment of payables and late payment charges being incurred; and failure to provide reports on the roofing contract to the board of directors.

However, nowhere does he find that any act or omission constituted insubordination, recklessness or gross negligence. On that issue, we do not know “what” was decided.

It is unclear as to what acts or omissions the Small Claims judge found collectively rise to the level of insubordination, recklessness and/or gross negligence. Further, the judge does not provide an answer as to “why” he made that finding.

Justice Edwards found that the reasons were not sufficient. He allowed the appeal, set aside the judgment and returned this matter to the Small Claims Court for a new trial before a deputy judge other than the trial judge.

Court File No: CV-13-39-00
01 August 2014
Justice Edwards awarded Maple Ridge $10,000 in costs.

Court of Appeal
PCC #231 then appealed the Divisional Court decision.

The Appeals court ruled that after several pages of analysis, the small claims trial judge concluded that although the grounds relied on by PCC 231 may not have been sufficient to constitute insubordination, recklessness and/or gross negligence when considered on an individual basis, collectively they were sufficient. The “what” and “why” are clear in the trial judge’s seven pages of reasons, which comprised of a thorough analysis of the relevant evidence, legal definitions, and legal authorities.

Further, there is nothing on the record that suggests that the trial judge made any palpable and overriding error in any of the findings. The factual determinations are supported by legal conclusion that the actions of Maple Ridge constituted insubordination, recklessness and/or gross negligence. Accordingly, the case will not be remitted back to Divisional Court.

I would allow the appeal, set aside the order of the justice of the Divisional Court and reinstate the judgment of the Small Claims Court.

With respect to the costs of the appeal in the Divisional Court, I would reverse the order of the Divisional Court and award $10,000 to PCC 231 as the successful party. PCC 231 is also entitled to its costs in this court, which I would fix at $7,500.

Was it all worth it?
Maple Ridge Community Management was the big loser. Not only did it pay a portion of the condo's court costs, it had to pay its own legal bills.

Plus its reputation took a hit, even if just very slightly as very few people will hunt through the Internet and read the judgment. So in my opinion, it would have been better off for Maple Ridge to have written off the two months fees.

PCC 231 went through two years of court battles and although it was awarded $17,500 in costs, it certainly paid far, far more than that in legal fees. (An owner told me that the condo paid $52,000 in legal fees so I can't say they came out ahead. In my opinion they would have done better if they had given Maple Ridge two months notice before hiring their replacement.

However, one of the directors wrote a letter to the owners claiming that the condo corporation won a victory and "There are some things that are simply worth fighting for" so not everyone agrees with CondoMadness.

In my opinion both sides lost. The real winners? Both law firms of course.
(I have been informed that a couple of owners have been adding up the costs of PCC 231's legal costs and costs of settlements over the last few years and they figure that they are approaching $500,000.)


Page v Maple Ridge Community Management Ltd
Small Claims Court
Court File No:  SC-16-00110059-0000
Before: Deputy Judge L. Olivo
Date:    21 March 2017

Ms. Page did not receive notice of a $767.70 Special Assessment in time so Maple Ridge put a lien on her townhouse unit.

Ms. Page paid the entire sum of $1,586.95 demanded by Maple Ridge on 06 May 2016 by cheque “under protest”.

Maple Ridge does their liens in house using paralegals. Ms. Page is a paralegal so she understood that paralegals are not authorized to to lien properties. She made a complaint to the law society.

Ms. Page, put in this claim for the return of legal fees of $819.25 charged to her in connection with the registration and discharge of the lien. She also claimed $25,000 in punitive damages and $25,000 in special damages for “the unauthorized practice of law.”

The plaintiff’s action was dismissed.

Losing side gets costs
This is where this case gets really interesting.

"Ordinarily, costs follow the event, and the defendant would be entitled to recover costs as set out in Rule 19. However, s. 131 of The Courts of Justice Act makes it clear that cost awards are discretionary. On this foundation, Rule 19.06 gives the court authority to order one party to pay an amount to another where a party has unduly complicated or prolonged an action or has otherwise acted unreasonably. Rule 1.03(1) directs that the rules shall be liberally construed to secure the just…determination of every proceeding on the merits.

Winning side gets nothing
"In this case, there were two factors that have caused me to depart from ordering costs to the defendant.

First, the plaintiff having identified a case of unauthorized practice, promptly reported it to the Law Society. While it was in her interest to do this, it was also in the public interest to prevent unauthorized practice, and to discourage Maple Ridge from continuing its practice of using paralegals for work they are not authorized to do. Ms Page obviously put time and effort into this and did so at her own expense. Her efforts should have some recognition.

Secondly, it was clear from the position taken by the defendant, and from the evidence of Ms. Payne, (a Maple Ridge employee) that the defendant was less than forthcoming in acknowledging that using a paralegal was unlawful.

Ms. Payne provided very little information about what Maple Ridge did following the events of May 2016. To the extent it could, the defendant suppressed and avoided revealing a full and clear picture of their handling of this matter to the court, and I find this unreasonable.

As well, as Ms Page noted, when she raised the issue of unauthorized practice, she was given, as she put it “the brush off”  as is apparent from the email exchanges and subsequent communications. This “circling of the wagons” is not a surprising response coming from a corporate bureaucracy targeted for inappropriate behaviour, but it is not behaviour that should be encouraged.

Accordingly I award the plaintiff costs fixed at $500."

I found it interesting that Maple Ridge was represented in this case by a paralegal. —CondoMadness


Win2 Management Inc. v MTCC No 1049
Small Claims Court
Court File No: SC–16–00002481–0000
Deputy Judge Marr
29 September 2016

In this case, the property management company, self-represented, won.

Win2 Management Inc sought $24,916.50 in damages. It was to be paid $6,300 a month for its services. The contract could be terminated with 60 days notice. Without any notice, on January 14, 2016 Mr. Ma, the owner of Win2, was told that he was to stop working for MTCC No 1049, thus terminating the written management contract

In its Statement of Defence MTCC No 1049 stated that the termination was for cause and breach of contract.

MTCC No 1049 only called one witness a security guard working for MTCC No. 1049. He testified that contrary to MTCC No. 1049’s policy, Mr. Ma allowed contractors to come into the premises after hours to do work and while contractors stated they had licenses and insurance, they did not have them with them. Mr. Ma testified that the contractors were licensed.

Based on the evidence lead at trial,  MTCC No 1049 did not establish that the Plaintiff’s management was flawed or that there was a fundamental breach of the written management contract or that the agreement was terminated for cause. Accordingly MTCC No 1049  must pay the Plaintiff the monies owing for 60 days it would have to pay the Plaintiff under the written management agreement during this 60 day notice period.

The Plaintiff billed for monies it would have earned if it had been given 60 days notice of termination of the written management contract before it was “fired” on January 14, 2016: $6,300 for January 2016, $6,300 for February 2016, and for half a month up to March 15, 2016, $3,150, plus HST for a grand total of $17,797.50.  I conclude the Defendant MTCC No 1049 must pay Win2 Management Inc $17,797.50 for this invoice.

Additionally, there is an invoice for October 15, 2016 for $6,300, plus HST for a grand total of $7,119.00.

Mr. Ma admitted when testifying that he had verbally discussed before signing the written management contract not charging MTCC No. 1049 for October 2015, the first month of the written management contract. However, Mr. Ma in his testimony and argument pointed out this free month was not a term of the written management contract drafted by MTCC No 1049. Accordingly, although he had never invoiced previously for October 2015, when the written management contract was terminated, he charged for the month of October 2015 the first month of the contract under the written management contract.

In light of the language of section 20 of the written management contract, I conclude that even if there was verbal agreement not to charge for management in October 2015, such an agreement is not enforceable as the written agreement is “the entire agreement between the parties”.  Accordingly, I conclude MTCC No 1049 must pay Win2 $7,119 for this invoice.

Accordingly, I grant the Plaintiff judgment on both invoices. The Defendant shall pay to the Plaintiff the sum of $24,916.50 for the two unpaid invoices.


Orr vs MTCC 1056
Ontario Superior Court of Justice
Docket: 01-CV-206672CM
Madam Justice D.A. Wilson
Heard: 09 November 2016

This decision comes after a very long legal dispute that included a 43 day trial and then an appeal to the Court of Appeal that remitted two issues back to the Superior Court judge. They were:
the valuation of the damages of the Plaintiff for the loss of the third floor of her condo unit; and
a determination of whether the condo corporation can claim indemnity from the property manager for costs paid and owed.

In 1998, Kelly-Jean Orr bought a three-story condo townhouse. However, the Declaration states that it is a two-storey townhouse. The third storey was illegally built in the attic which is a common element.

When she became aware of this, Orr sued the law firm that handled the sale, the condo corporation, the vendor and Brookfield, the property management company.

In her original judgment, the judge ruled that the vendor and the lawyer were liable for Orr's damages.

Orr appealed that decision and the Appeals Court decided that Brookfield prepared the estoppel (status) certificate so they were negligent. The dismissal of Orr’s claims against Brookfield was upheld on the basis that the property management did not owe Orr a duty of care; rather, it was acting on behalf of the condo corporation, MTCC 1056.

Positions of the Parties
MTCC 1056 submits that there was no finding of independent negligence on behalf of the condo corporation and the only reason it had to pay damages and costs to the Plaintiff was because Brookfield was negligent when it prepared the the estoppel (status) certificate.

Brookfield's position was that the Plaintiff’s claims arose as a result of actions of the other defendants, particularly Weldon who was on the Board of Directors of MTCC 1056 and who was aware of the illegality of the third floor of unit 113 when he sold it to the Plaintiff and that it’s role was small and insignificant in the larger picture.

"MTCC 1056 has a statutory duty to provide an estoppel certificate to a prospective purchaser and it cannot download that duty onto Brookfield."

"Furthermore, the provision in the Agreement that requires MTCC 1056 to provide insurance for Brookfield is clear evidence that it was never intended under the Agreement that Brookfield would be responsible for its own negligence."

The Court of Appeal found that Brookfield was negligent in the performance of a duty it had contracted with MTCC 1056 to carry out..

MTCC 1056 is entitled to indemnification from Brookfield for the costs it was ordered to pay to the Plaintiff in the amount of $201,670.81.

MTCC 1056 is not required to pay the trial and appeal costs of Brookfield in the amount of $63,825.62.

Brookfield shall pay to MTCC 1056 its costs of the trial fixed in the amount of $525,000, to be paid in equal amounts to the insured and uninsured interests.

MTCC 1056 is entitled to indemnification from Brookfield for the appeal costs it was ordered to pay to the Plaintiff in the amount of $44,170.81.

MTCC 1056 was successful on the trial of the indemnification issue. As such it is entitled to its costs from Brookfield, which I fix in the sum of $25,000.

The costs listed here comes to $859,667.24. The total costs must be far higher. That was one expensive status certificate.


1238235 ONTARIO Ltd  o/a Distinct Management Group and TCECC No. 1702
Ontario Superior Court of Justice
Toronto Small Claims Court
Court File No: SC-16-5457-00
Before : J Prattas DJ
Released: 14 July 2017

Endorsement on a Motion
Distinct Management Group (DMG) was looking for:
$12,430  for two unpaid invoices
$04,123.01 for legal fees
$05,000  punitive damages

DMG and the condo corporation entered into a property management agreement commencing 01 Dec 2010, which was renewed and ultimately ended on 31 May 2014.

The condo corporation was defrauded by its former property manager, Chatsworth, and its books and records were in disarray for several years from 2005 to 30 November 2010. No audited statements had been prepared for this period. DMG claimed to have provided bookkeeping services to reconstruct the accounting records from 05 Sept 2005 to 30 Nov 2010 related to the Chatsworth fraud.

What I found interesting
Besides the condo being defrauded by the previous management company, there are three important issues.

The claim for the invoices is statute barred.
A claim is discovered a reasonable time between the time that the account should have been delivered—not necessarily when actually delivered as submitted by the defendant. A contractor submits a bill, waits 30 days for payment and that is when the two years starts to file an application. These two claims were over two years late.

Confict of interests
DMG”) is owned by Susanne Gilbert. Tony Flynn is her husband and is an employee of DMG. While the Management Agreement was in force with the condo corporation, Tony Flynn was employed by DMG and was also a director and president of the condo.

Inside Management rule
DMG submitted minutes from two board meetings, an Owners Meeting and from an AGM alleging that their work was requested, authorized and approved by the Board and the unit owners.

Yet, the minutes doesn't show a resolution of the Board or of the owners requesting, authorizing or approving any of the alleged DMG's work or approving compensation for the management company over and above its regular monthly compensation.

Susanne Gilbert, Tony Flynn and a former director submitted affidavits supporting DMGs claims but the judge ruled that the affidavits were self-serving and attempts to reconstruct the facts long after the events.

Disposition & costs
Distinct Management Group failed to win and as a result they were ordered to pay TCECC #1702 their costs of $750.