Owners caught in legal crossfire at north London condo complex
The London Free Press
By Hank Daniszewski
09 November 2017

Anna Schmidt has had the access to her condo at 15 Jackstay Cres confined because of construction work around the exits. For Daniszewski feature on condo buildings at Masonville and the complaints and lawsuits they have drawn
MORRIS LAMONT/THE LONDON FREE PRESS /POSTMEDIA NETWORK


Anna Schmidt says she’s trapped in her own condo complex.

The wheelchair ramp she uses to get into the building was torn out in August, during construction, and she’s been out only once since then.

“I’m a prisoner in my own building,” says the London woman, who’s lived in the complex for 22 years.

She’s not the only one feeling boxed in.

Residents of Masonville Gardens in London are embroiled in a complex and costly legal battle between their own condominium corporation board and a construction company that was fired from a multi-million dollar renovation contract.

It means the residents are now on the hook for regular condo fees plus a monthly loan payment that’s raised their monthly payouts to between $481 and $772, depending on their condo’s size — more than some are paying for mortgages.

On top of that, this month they’re required to shell out about $1,500 each in a one-time payment to finance the unfinished construction.

And, if they try to bail out?

That’ll cost them, too.

Each unit faces an $8,000 to $12,000 payment to potentially cover a $3.3-million construction lien slapped on the condo corporation by the contractor.

The Catch 22 — in a province where condo ownership has soared amid rising house prices, prompting Queen’s Park to move to tighten consumer protection — is what one observer calls an unusual example of the fallout that can happen when one owner holds a large bloc of the units in a complex.

“This is very extreme. It’s not your typical condo. This is the, maybe, five per cent of condos that the (changes to Ontario law) are designed to help.” said Michelle Kelly, a Guelph lawyer and condo law specialist who has advised some of the Masonville owners of their options but doesn’t represent them.

Charlene Aquilina, a former condo board member, lives in one of the units and owns several others she rents out.

“The tradespeople have done a beautiful job, the buildings look wonderful. However, condo fees have gone up 500 times the rate of inflation,” she said, calling it “not great for the folk here who are disabled or seniors on a fixed income.”

Another resident, who did not want to be named, said she’s seen her monthly condo fees now top $600, almost 50 per cent more than her monthly mortgage.

The condos, near Masonville Place mall, were built in 1989 and most are modestly priced. She said owner-occupants like herself feel trapped — they can’t afford to stay, can’t afford to pay to get out or pay the lawyers to represent their interests.

“These are not luxury condos, these are regular folks,” said the woman, who’s lived in her two-bedroom unit more than 10 years.

She said the residents are weary of living with construction debris and damage for four years

“There was open excavation and mud everywhere. Living in a construction zone for four year is beyond what we ever expected and there is no end in sight.”

Schmidt said she can’t get out at all, relying instead on friends to bring her groceries. She’s missed four medical appointments. She said she can’t negotiate the uneven ground at the site and some temporary ramps and boards that were installed aren’t safe for her to use.

Last month a hearing about the construction lien placed on the property by contractor HIRA Ltd. of St. Thomas was heard in court in London. Lawyers for the condo board argued the lien is excessive and should be cut to about $500,000, which could be covered by the condo corporation and free up owners to sell their units.

Besides the lien, HIRA has filed a $12.5-million lawsuit against the condo corporation alleging breach of contract. The allegations have not been proven in court.

At the centre of the controversy is Sal Pacifico, head of the condo board, owner of a property management company and the former owner of Club Phoenix nightclub on Richmond Row. Pacifico and his wife, Silvana, collectively own 35 units in the 326-unit, four-building complex.

Pacifico said owners are getting value for their investment in the renovations, despite the construction issue.

“You won’t find a better location than this. It’s worth the trouble to go through to get this finished right,” said Pacifico, who has an electrical engineering degree from Western University,

He said the complaints are coming from about a dozen “disgruntled” owners, while the vast majority are happy with the project.

HIRA was originally hired in June 2015 by EXP, an engineering consulting firm working for the condo board, to do a $4.5-million renovation on the complex.

HIRA, in its lawsuit, contends upgrades and changes sought by the board through EXP delayed work and caused the project cost to double to $9 million.

It also maintains that even before the board fired the company in May, two other firms — Endiang Ltd. and Pepe Construction — started taking over.

The principal of those firms is Sylvester Pepe, who is related to Silvana Pacifico. Pacifico said he and his wife declared a conflict when Pepe Construction was hired by the board.

The condo board hasn’t filed a statement of defence against HIRA’s lawsuit, but Pacifico dismissed it as “frivolous.”

Pacifico said the increase in monthly fees is due to higher interest rates and lack of construction financing due to HIRA’s legal tactics.

He also said the condo board has tried to help Schmidt with her mobility problem and remove any obstructions.

“We have tried to accommodate her any way we can. But she chooses to just complain” Pacifico said, noting new disability-accessible will be installed.

Pacifico said the project could be completed in another month.

The financing for the Masonville Gardens project is also in trouble, however.

In early September, TD Bank pulled a $9.5-million loan after ordering an audit on the project. The condo board is now lining up another lender at a higher interest rate, but Pacifico said it’s subject to removal of HIRA’s construction lien.

The issues swirling around the project come as Ontario moves to better protect condo owners, with some changes that took effect this fall and others coming Feb. 1. The overhaul came amid media reports of Toronto-area condo boards being taken over by three men elected to the boards even though they weren’t listed as owners or residents. They took control of one luxury building’s budget until the owners banded together to force their resignations.

The new measures include requirements directors disclose whether they own or occupy a unit, mandatory updates, easier access to records and new rules making it easier for owners to take part in meetings.

Kelly said it’s not uncommon for companies to buy up condo units to create a rental pool but the 35 units owned by Sal and Silvano Pacifico is unusual.

“It’s still quite rare to have one owner with so much control over the rest of them,” Kelly said.

She said the new rules come a little too late to help the Masonville owners. While the revisions to the law won’t prevent non-owners from sitting on a condo board, they’ll likely face more scrutiny including any disclosures of possible conflicts of interest, she said.

The problem with condo governance, Kelly said, is that it relies on owners taking part. But the turnout for meetings is often low, making it easier for someone to manipulate a condo board.

“It definitely makes it easier . . . you have less people to see it.’

She said condo owners always have an option to throw out the board owners. The owners only need 15 per cent of owners to call a meeting but need 50 per cent of the units’ owners to remove a board, which she said is difficult if one owner has a large block of units.

Masonville Gardens

5 Jacksway Cresc.

326 units, about 70 owners; some units rented to students.

Besides condo board president Sal Pacifico, who along with his wife owns 35 units, other board members include Altaf Jiwali, who owns about 34 units through numbered companies; Marcello Di Vincenzo, a 3M executive who own one unit and Paul Graham, a former resident who doesn’t own a unit.

About Hira's lawsuit

Hira contends the project’s cost soared and work was delayed because of upgrades and design changes the condo corporation demanded through EXP.

It maintains much of the fibre board was rotten and mouldy and had to be replaced, adding to delay.

It contends the first cheque it received for work done bounced. Concerned about the condo board’s ability to pay, it demanded financing information.

It alleges two others firms, Endiang Ltd. and Pepe Construction, took over even before HIRA was fired in May.

The condo board's repsonse

No statement of defence filed yet.

A factum filed in court by lawyers for the board, in response to HIRA’s construction lien, blamed HIRA for the delays and problems. The board contends “HIRA continued to fail to comply with their own proposed schedules as a result of their deficient work, mismanagement of the project, and failure to have adequate labour on site.“

The condo board factum says HIRA worked without building permits, and contrary to the building code.

Another owner's view
“Every step of the way, they have made the right moves, in my opinion.” said Kevin Love, who said Pepe Construction has made impressive progress in the last few months.

Condos in Ontario
Have exploded to 750,000, up from 270,000 in 2001, with 1.6 million people now living in them.


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