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Court cases—status certificates
MTCC No. 673 v St. George Property Management Inc.
MTCC No. 673 v St. George Property Management Inc. —Costs
1716243 Ontario Inc. v. MSCC No. 54
Keele Medical Properties Ltd vs MTCC 1786   (Special Assessment)
MTCC No. 723 v. Reino    (the life span of an error in a Status Certificate)


MTCC No. 673 v St. George Property Management Inc.
Ontario Superior Court of Justice
Court File No: CV-14-516468
Date: 16 February 2016
Justice Perell

St. George Property Management Inc. issued status certificates for the condo corporation and part of their manageemnt contract stated that if they made an error in the certificate, they will be responsible for the corporation's costs.

The corporation moved for a summary judgment against the Property Manager for $97,182.68 plus prejudgment interest and the condo won.

The condo corporation will also be granted court costs.


MTCC No. 673 v St. George Property Management Inc.
Ontario Superior Court of Justice
Docket:  CV-14-516468
Date:    30 March 2016
Justice Perell
Reason for Decision—Costs

"To string the clichés, hindsight is 20:20 and, to make a long story short, had St. George Property Management Inc. (“the Property Manager”) worn its mistake and taken its medicine, it would not have made a bad situation worse, and it would have saved itself from the following bitter pill of a costs award."

In the decision above, the condo corporation was awarded a summary judgment for $97,182.68 plus prejudgment interest.

Justice Perell wrote:
"The action is now completely over, and the Condominium Corporation was the successful party. There is no reason not to apply the normal rule that costs follow the event. As for the scale, because of the indemnification provision in its Agreement, the Condominium Corporation is entitled to full indemnity of its reasonable costs."

Reasonable costs
"I emphasize the word reasonable because it is still the court that is awarding costs, and one of the guiding principles about awarding costs regardless of scale is that the costs be reasonable in the context of the particular case.

In the immediate case, costs of $57,816 are excessive, but part of the excess is attributable to the fact that the Property Manager put up very stiff resistance and refused to concede that it was responsible for the mistake and in resolutely refusing to honour its agreement to indemnify. That said, $57,816 is too high and having regard to the usual factors that guide a court in the exercise of discretion with respect to costs, I award the Condominium Corporation $42,000, all inclusive."

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1716243 Ontario Inc. v. MSCC No. 54
Ontario Superior Court of Justice
Barrie Court File No:  CV-13-0816
Barrie Court File No:  CV-13-1172
Date: 24 March 2014
Justice Gilmore

The numbered company (the owner) bought a condominium unit that came with two parking spots. They were issued with a status certificate that stated the common expenses for the unit and the locker but did not include the common expenses for the two parking spots.

So for the first fiscal year that the status certificate covered, the owner did not have to pay the common element fees for the two parking spots but it had to for all the following years. The owner wanted the error on the status certificate to bind the condo corporation forever.

Owner refused a settlement offer
The condo coropration went so far as to agree to waive the debt if they paid from April 2013 forward, but the owner refused.

Common element payments
Since May 1, 2012, the owner paid for only the condo unit and not the amount required for the parking spots. As such, each month there was a shortfall in the amount of $168.04. In order to secure Muskoka’s position to register the condominium lien it applied all payments received by the owner to its oldest debt, and in that fashion advanced forward the default date and time to register the condominium lien.

On January 18, 2013, the condo corporation issued a notice of lien in accordance with the Act, which indicated that the amount owed to it was $6,944.99 and that if the amounts due and owing were not paid within ten days it would register a condominium lien. On January 31, 2013, the condo registered the condominium lien described above due to non-payment.

The judge agreed that the condo corporation should be entitled to apply credits in the manner that they see fit by allowing the default to roll forward every thirty days.

The condo corporation also argued that there is nothing in the Act that permits a unit owner to not pay common expenses in full, even if they have a dispute with the condo corporation.  In Carleton Condominium Corp. No 396 and Burdet, 2012, the court agrees that the Act provides that regardless of any other claims between the parties condominium fees must be paid. The condo submits that even if the owner thought it was overpaying, it should have kept paying, and when the matter was resolved it would have either received a credit for the full amount or a reduction in the payment of ongoing common expenses.

Costs
By the time of  the court date, the condo corporation had spent $30,000 to bring the matter to court. As the origin of this matter was an error on the part of the condo, it was in the judge's view it would be inequitable to require the owner to pay the full amount of interest and costs to which the condo might otherwise be entitled pursuant to by-law number 6, section 4. (Interest rate of 24%.)

In the judge's view neither party had significant success. The owner is required to pay the additional common expenses, both arrears and ongoing, for the two parking spaces. On the other hand, the condo corporation was unsuccessful in obtaining the full amount of the lien which they sought to enforce.

If the parties cannot agree on costs the judge would hear cost submissions.

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Keele Medical Properties Ltd vs MTCC No. 1786
Ontario Superior Court of Justice
Court File No: CV-15-533147
Before: Justice V. R. Chiappetta
Heard: 02 March 2017

A company buys ground floor retail units from the developer and receives three status certificates prior to taking possession. They all say the same thing;
1. There is an operating budget deficit.
2. There is not enough money to make contributions to the Reserve Funds.
3. The corporation's records are incomplete.
4. An increase in monthly expenses and/or a special assessment may be
    required once the board gets better information.

The board announces a special assessment. The company claims that it should not have to pay the special assessment because it was not disclosed on the status certificates and/or the commercial units should be exempt.

The condo corporation puts a lien on the company's units. The company goes to court to have the lien removed.

The judge doesn't agree.

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MTCC No. 723 v. Reino
Court of Appeal for Ontario
Docket: C63859
Before:  Doherty, MacFarland and Paciocco JJ.A.
Date:     07 March 2018

Issue
The issue is whether a condominium corporation having issued a prior “clean” status certificate in relation to a unit will, in the event it subsequently discovers matters it believes should be disclosed, be estopped from noting such matters in a subsequent status certificate requested by the owners of the unit.

Dante Reino purchased the condominium unit from his mother in 2013. He requested a status certificate at that time and was issued a “clean” certificate.

Deciding to sell his unit in 2016, he requested a status certificate from the condominium corporation which he intended to use to market his condo. The certificate he received noted at s.12 thereof:

The Corporation has no knowledge of any circumstances that may result in an increase in the common expenses for the unit except: (1) the unit is in breach of s. 18(6) of corporations declaration amended, which provides that no dwelling unit owner shall make any change or alteration to the layout or configuration of any dwelling unit without the prior written consent of the Board of Directors. In this regard the unit configuration has been altered so as to add a second bedroom and the kitchen has been relocated without the consent of the Board of Directors. The policy of the Board of Directors is generally not to approve any changes that tend to add to the occupant load factor within the building. This circumstance may result in the corporation taking steps to remove the alteration and restore the unit to its original layout and the costs of the corporation’s actions in this regard being added to the common expenses attributable to the unit. 

Mr. Reino acquired his unit in 2013 from his mother who had owned the unit from 2004. At the time of her purchase she had received a “clean” certificate from the Condo Corporation as her son did in 2013. He claimed that neither he nor his mother had carried out any alteration to the unit as described in paragraph 12.

The application judge concluded that the Act was clear and unequivocal and that the condominium corporation
•
 …is bound to its clean and clear status certificates dated August 20, 2004 and October 13, 2013. It cannot rely on the alleged breach in its November 7, 2016 status certificate.
•
 …and is estopped from its November 7, 2016 status certificate as it is currently written.
  
The judge then granted Mr. Reino the relief he sought in his Notice of Application including:
•
 a declaration that neither sections 12.1 nor 23 of the status certificate issued November 7, 2016 binds the applicant nor Unit 16, level 17 which is the unit owned by the applicant;
•
 an order directing the respondent to remove Sections 12.1 of the November 17, 2016 status certificate;
•
 an order to amend s. 23.1 of that certificate by removing the words:
However, the unit layout has been altered without the prior consent of the Board of Directors of the corporation contrary to the declaration of the corporation.
•
 an order directing that the condominium corporation issue a clear status certificate pursuant to s. 76 of the Condominium Act in relation to the subject unit.

Appeals court analysis
The Condominium Act is among other things consumer protection legislation. The purpose of a status certificate is obvious – it is to bring to the attention of a prospective purchaser or mortgagee matters which may be of concern to them when contemplating the purchase of a unit.

The certificate is binding on the corporation as of the date it is given … as against a purchaser or mortgagee of a unit who relies on the certificate.

The purpose for which the respondent asked for the certificate was to market his unit for sale. A “clean” certificate in these circumstances would be misleading to a prospective purchaser.

The application judge erred in concluding that the condominium corporation was in effect estopped from issuing anything other than a clean certificate in the circumstances of this case.

The condominium corporation discovered that the unit layout had been changed between the time it issued its 2013 certificate and when it issued its 2016 certificate. It was obliged to include that information in the certificate. To do otherwise would be misleading to a prospective purchaser.

The proper remedy
The respondent has a remedy if the condominium corporation negligently issued the clean status certificate to him, to his detriment. He can sue the condominium corporation for any diminution in the value of his unit by reason of any improper disclosure that may have occurred – provided he does so before the limitation expires in November of this year.

In this sense, he is entitled to rely on the Certificate issued to him in 2013 and the condominium corporation is bound by it. If there was, in fact, negligence on the part of the condominium corporation it would be determined in such action.

Decision
The appeal is allowed and the orders of the application judge dated April 26, 2017 are set aside.

Costs
We see no reason why costs should not follow the result as it the usual order.

Costs of the appeal to the appellant fixed in the sum of $17,500 inclusive of disbursements and HST. The application judge fixed the costs below in the sum of $14,125 inclusive of disbursements and HST. In view of the result in this court, those costs are also awarded to the appellant for a total award to the appellant in the sum of $31,625.

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