CIBC sues condo over a Power of Sale (Part 1) |
CIBC sues condo over a Power of Sale (Part 2) |
CIBC sues condo over a Power of Sale (Costs) |
CIBC sues condo
over a Power of Sale (Appeal) |
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YCC #385's lien rights expired prior to the registration of the lien certificate. |
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The condo corporation claiming priority over CIBC's mortgage for costs incurred in a by-law infraction with the unit owner was oppressive or unfairly prejudicial to the mortgagee. |
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The court should give CIBC the
proceeds of the sale plus additional funds or an order saying that the
mortgagee has full priority. |
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On
28 January 2010 CIBC gave Frank Blowes and his spouse a mortgage. |
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On 03 Feb 2009, YCC #385 commenced proceedings against Blowes. YCC #385 did not inform CIBC of its claim under Section 134 so CIBC could not defend its interests. |
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Madam Justice Pollack judgment of 14 Feb 2011 gave courts orders to restrain certain behaviours and ordered costs for $15,000 payable in 30 days at 3% per annum. |
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YCC #385's first law firm's legal costs from 31 July 2009 to 01 March 2011 was $44,272.63. It appears that Justice Pollack considered the sum of $15,000 out of the billed $44,272.63 to be reasonable. |
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The $44,272.63 related to costs of this by-law dispute and not ordinary common expenses. |
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These costs were actually incurred prior to March 2011, 9 months before the lien certificate was registered, therefore the lien rights expired by the time the lien certificate was registered. |
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Blowes (the owner) brought a motion to set aside the Pollack order and failed. Justice McEwan awarded partial costs of $10,371.00. He noted that the amount of costs awarded was reasonable. |
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Blowes brought a second motion to set aside the Pollack order and failed. Madam Justice Brown ordered costs to be paid. The amount was unknown to CIBC. |
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It is the unit owners obligation to meet all requirements of the Condominium Act, the declaration, by-laws and rules of the condominium corporation. Unit owners have an obligation to deliver to CIBC any notices, claims and every other communications relating to the property or common elements of the building. Failure by the unit owners to meet any of their obligations under the mortgages is an event of default under the mortgages. |
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YCC #385 declaration states that mortgagees will be informed who has notified his interest to the corporation. |
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On or about 14 Feb 2011, YCC #385 removed their law firm and hired a different law firm. |
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The second law firm charged $37,989.25 to defend against the Pollack order. (31 Oct 2011 to 20 May 2014.) |
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YCC #385 registered the lien on 12 Dec 2012 for $44,272.63. |
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Payment of costs fell due on 16
March 2011. Therefore the default day
was 17 March 2011. The three months was over on 17 June 2011. YCC #385
did not register their lien until 12 Dec 2011. (Section 85.(2) of the Act states: "The lien expires three months after the default that gave rise to the lien occurred unless the corporation within that time registers a certificate of lien in a form prescribed by the Minister."—editor). |
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The owners defaulted on the unit on 27 Dec 2013. CIBC commenced proceedings by statement of claim for payments of all amounts due under the mortgage and possession of the property. |
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On 12 May 2014 CIBC's agent said it was not able to secure the property because it had been sold by YCC #385 under Power of Sale proceedings. |
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Prior to CIBC taking possession,
YCC #385 sold the unit under power of sale for $110,000. |
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YCC #385 sent a Notice to Encumbrancer (Notice of Lien) to CIBC for $59,857.37 not the $15,000 costs award granted by Her Honour. |
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The CIBC lawyer was informed by YCC #385's law firm on 13 May 2014 that the unit was closing on 30 May 2014. |
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Some of the money went to the
YCC #385 law firm and the rest went to the condo corporation. |
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As of May 2014 YCC #385 claimed
a total of $113,616.68 under the Lien Certificate. |
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YCC #385 told CIBC that its
lien, over a by-law infraction, has priority. |
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YCC #385 claimed $113,616.68 as of 20 May 2014. $82,261.88 was legal costs incurred in a proceeding for compliance under Section 134 of the Act. |
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CIBC was not given proper notice. |
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Invocation of Section 134.(5)
was prejudicial and oppressive to CIBC. |
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The fees claimed under the lien by YCC #385 are excessive, unreasonable and eclipse the amounts actually fixed by the court in the Blowes application. |
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The two law firms billed considerably more than costs granted by the courts. |
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The payout statement includes $14,472.85 for additional interest calculated on $82,261.88 with interest rate of 18%. CIBC claims that the interest rate should be 3% per annum as ordered by Justice Pollack. |
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YCC #385 claims that Section 134 means that CIBC is not entitled to any portion of the sale. |
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YCC #385 pleads and relies on
Subsection 134.(5). YCC # 385 is and
was entitled to the $15,000 together with any additional costs to YCC
#385 in obtaining the order. YCC #385's actual costs were $44,272.63. |
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Blowes 2nd motion to set aside the Pollack order on 28 May 2013 was dismissed by Justice Brown and he was ordered to pay costs of the said motion in the amount of $1,935.51. |
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YCC #385 obtained a default judgment for possession of the unit on 11 April 2013. |
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YCC #385 states that the lien secured the total sum of $114,656.18 in common expenses. The unit sold for $110,000. |
[56] | There is no evidence that, at any time prior to the registration of its lien certificate, YCC entered into discussions or other communications with either of the owners of Unit 302 regarding the timing for payment of the Claimed Common Expenses under s. 134(5), which, as I have stressed, originated with the Costs Order. To the point, there is no evidence that YCC’s delay in registering its lien certificate was intended to assist the unit owners by deferring collection efforts regarding the Claimed Common Expenses. |
[57] | Yet the quantum of the Claimed Common Expenses continued to mount significantly. The costs awarded under the Costs Order are in the sum of $15,000. As I have said, by May 2014, YCC’s lien claim totalled $113,616.68. |
[58] | On the record before this court, it appears that YCC’s delay in registering its lien certificate and the ballooning costs forming part of the Claimed Common Expenses arose because of internal YCC matters, including the involvement of two different law firms to assist it in obtaining the compliance order and in responding to unsuccessful efforts by the defaulting unit owner to challenge the validity of the order. |
[59] | In brief, it is undisputed that YCC was placed under the administration of a court-appointed administrator in November 2010, the administrator fired YCC’s property manager and YCC’s lawyers who had carriage of the compliance proceeding, the administrator retained new solicitors for YCC in March 2011 and a new property manager, and the outgoing property manager failed to inform its successor of the compliance proceeding and the Costs Order. As a result, YCC’s new property manager appears to have first learned of these matters on an unspecified date in June or July, 2011. |
[60] | Further, the record indicates that, although YCC’s new solicitors obtained a copy of the issued and entered Costs Order by June 23, 2011, a demand for payment of the Claimed Common Expenses was not forthcoming until August 15, 2011, almost two months later. |
[61] | The main component of YCC’s $113,616.68 lien claim as at May 2014 consisted of $82,261.88 for legal costs, of which $44,272.63 represented costs billed by YCC’s first solicitors. The balance represented costs charged by YCC’s second solicitors, in the sum of $37,989.25, plus interest and additional miscellaneous costs. In the result, by the time Unit 302 was sold, the amount owed by the unit owners as s. 134(5) Claimed Common Expenses was more than seven and a half times the amount originally awarded under the Costs Order. |