Condo Adviser Episode 40: Condo Low Law Palooza

[MUSIC PLAYING] ROD ESCAYOLA: Hello good evening, everybody. I'm Rod Escayola, your condominium lawyer with Gowling WLG, and welcome to the last episode of the season of the Condo Advisor Webinar, a bit later, as I said, than we usually do it. We usually do it closer to the beginning of the month. There's all sorts of stuff that happened this year, so here we are.

 

But we wanted to repeat last year's social experiment. We had the Condo Low law Palooza episode, and so I did like we did last year. We invited all of our friends from different firms-- condo lawyers, from different firms to I guess hear about their favorite case and at the same time, it may allow us to settle a few old scores. If maybe I may not like how Sonia's going to present her case, and maybe have a different view about that case, who knows? We'll see.

 

So let me introduce the people that we have around the table here, and the question I'm going to be asking them is-- last year, we asked them if I was to bump into you by the lake, what song would you be listening to? This year I'm going to ask them, if I was to bump into you by the lake, what drink would you be having at that point in time this summer?

 

So let's start with the geekiest of all condo geeks. The a total encyclopedia of condo law, heading her own firm, Sonja Hodis. Hello, Sonja.

 

SONJA HODIS: Hi, Rod. Thanks for having me back, and I hope you're bringing two mojitos with you when you run into me there at the lake.

 

ROD ESCAYOLA: Two for me?

 

SONJA HODIS: Well, no, two for me.

 

[LAUGHTER]

 

Nice. Nice. OK. So that's the drink. Perfect. And so today you're going to be presenting two cases, and so just hang tight. I'm going to keep going around the table. Oh, for some reason, I have the condo twin as the next one that's because it's in alphabetical order today. So the friendliest of the condo geeks. We actually call him the AGM whisperer here. From Gowling WLG, we have the Graeme. Hello, Graeme.

 

GRAEME MACPHERSON: Hi, Rod. Thanks for having me again.

 

ROD ESCAYOLA: Well, you're contractually bound to be here, so that's why.

 

GRAEME MACPHERSON: And I'd do it for free.

 

ROD ESCAYOLA: What's the drink?

 

GRAEME MACPHERSON: I'm a man of simple tastes. You can likely find me with a Molson Canadian.

 

ROD ESCAYOLA: Nice. Well done. You'll also get to present two cases. I think the theme for you is going to be parking, I think.

 

GRAEME MACPHERSON: Yeah.

 

ROD ESCAYOLA: The next one I think is the first time he joined-- us joins us on one of these episodes, and I had a few files where we were working together on the same side, and had a few files where we were working on opposite sides, making him right half of the time, and wrong the other half of the time.

 

He's actually the author of a law book that's coming near you soon enough, and he's also forming condo managers. With SV Law, we have Robert Mullin. Hello, Robert.

 

ROBERT MULLIN: Pleasure to be here. Thank you, Rod.

 

ROD ESCAYOLA: Hey, so what's this condo law book you told us? I think it's coming out for Christmas, and I'm just saying it just to put pressure on you because now that it's out there, you can't delay it.

 

ROBERT MULLIN: Well, my publishers have been waiting about almost a decade for it. So you must have received an email from them, but writing the book, Essentials Of Canadian Law-- Condominium Law, and hope to have it out by Christmas.

 

ROD ESCAYOLA: Wow, that's going to be a great stocking stuffer. So what's the drink that you are using to fuel your late writing nights?

 

ROBERT MULLIN: Well, Hemingway always said that drinking and writing don't mix, but if I do have time for a drink, I mix, if you can believe it, Southern Comfort with Coke Zero and a slice of orange. The occasional time I'm allowed to have a drink, that's what I have at the dock.

 

ROD ESCAYOLA: Nice. So I think what they say is draft drunk, but proofread sober.

 

ROBERT MULLIN: That's right.

 

ROD ESCAYOLA: That's what-- I think that's what they say. Now always the first to accept to join our webinars, a big fan of the webinars, and we're a big fan of hers, she's the Condo Tribunal Tamer from last condo law, we have Natalia Polis. Hello, Natalia.

 

NATALIA POLIS: Hi, Rod. Thanks for having me back again. Always a pleasure.

 

ROD ESCAYOLA: Ready for the big evening where you're going to present two cases?

 

NATALIA POLIS: Ready as ever.

 

ROD ESCAYOLA: What's the drink?

 

NATALIA POLIS: So I don't generally discriminate against any alcoholic beverage, but if I'm at the dock, usually either a seltzer or some kind of IPA beer is typically what I go for.

 

ROD ESCAYOLA: OK. Wonderful. Folks a new face in condo land. Freshly minted lawyer. Brand new to our team. The new condo twin with the-- but I mean, I said she's a lot-- new on a lot of fronts, but she's got a lot of experience. She is-- she has 12 years worth of experience in competitive karate, and she apparently specializes in desserts from Trinidad, which she will offer upon request, apparently. So we have Nalia. Hello, Nalia.

 

NALIA: Hello, Rod I'm happy to be here. Super excited.

 

ROD ESCAYOLA: Nice. Well, thanks for joining the team, and for being on this webinar. And apparently, and this I was told not to share, but apparently, you also can sing Walt Disney songs upon request.

 

NALIA: I really can. I don't know how that, but I can.

 

ROD ESCAYOLA: Well, rest assured it's not going to happen in this episode, but we're keeping this in mind for our future use. So there it is. It's now-- I'm done with the introductions. I'm going to skip the housekeeping just because you've heard it a million times, but I'm going to say this-- the chat lines are open, and so feel free to share your views about the cases as we talk about them. Feel free to heckle from the sidelines. I certainly will be doing that, so feel free to join in the fun.

 

Sonja, we're going to start with you. And so each of the lawyers is going to present a case, you're going to have about five minutes for your-- per case, and if you go over the five minutes, Graeme is going to play the Oscar music just to escort you off the stage, and then we'll go to the next person, and so on and so forth, and then we'll get back to you for your second case.

 

But we're going to start with you, Sonja. I think you're going to go with the Manna versus YCC 62 case.

 

SONJA HODIS: Exactly. Thanks, Rod, and I'm going to try and keep it under the five minutes. That's always the hardest part of these presentations. I want to talk about the Manna case because it's a recent case, but that case made it very clear that a condo corporation has a duty to enforce, period. There's no question.

 

It doesn't matter if the owner is not on good terms with the board, the one that's making the complaint about non-enforcement. It doesn't matter if the owner or whoever it is that's alleging that the board is not enforcing has a bad history with the board, it doesn't matter if they are not raising the issues appropriately. The CAT has made it very clear the duty to enforce that the board has under the act is not erased just because you're dealing with someone who's difficult.

 

So I think that's a really important lesson that boards and property managers should be taking away from this case. You need to separate the request for enforcement from any other issues that you may have with that owner or tenant or whoever's making the complaint. It's very clear from CAT that even a difficult owner or person has a right under the act to expect that the board is going to fulfill their duties to enforce.

 

The other nice thing about the Manna case that I found really interesting is it provides a good discussion on the difference between situations where a board has some discretion when they decide whether they're going to enforce a rule or not, and cases where there is no discretion. And they took some examples.

 

The owner in this case that filed the CAT application had a whole list of things that they were complaining about that the board did not enforce, and the CAT, in their decision, found that in some instances, the board didn't fulfill their duty, but in other instances, they did. But they went into this discussion about rules that are clear and mandatory.

 

So, for example, at this condo, there was-- you cannot park in a parking space, unless the vehicle is licensed. And the CAT said that this is a mandatory rule. There's no room for discretion there, and a failure to enforce this type of clear and mandatory rule would actually be considered an arbitrary exercise of discretion, and a finding that the board had not fulfilled their duty to enforce.

 

On the other hand, you may have a rule where there is some built-in discretion. And in those cases, the CAT is going to be less likely to interfere with the board's exercise of their discretion, but you have to take a look at how the rule is worded.

 

So another example in the case dealt with in the board's opinion if something was unsightly, and in that case, the CAT said that's something for the board to decide, it's not for the owner to decide. And as long as the board has a justified reason for determining in their opinion that something wasn't unsightly, then the CAT is going to stick to that, and they're not going to go deeper than that.

 

So very good lesson to learn from this case is take a look at your rules. Maybe it's a good time to review them to determine whether or not the wording in those rules actually give you discretion or not, and depending on what you want to happen, you may need to be amending those rules. So that's the Manna case.

 

ROD ESCAYOLA: OK. Wonderful. You've left some time on the table, so I'm going to actually jump in and ask you a couple of questions. Do you recall-- sorry I'm putting you on the spot, but do you recall sort of like what were the facts or what was this person complaining about? Do you have that?

 

SONJA HODIS: Yeah, that's going to take more than five minutes. It was the huge, huge list, but it ranged from things like visitor parking issues, underground parking issues, locker storage, storing things on balconies, but it was like a very long laundry list of complaints and the CAT went through each of those complaints individually and as I said, in some cases, they found that the board properly exercised their discretion to not enforce, and in other cases, they said, no, you didn't.

 

ROD ESCAYOLA: And maybe-- I'm turning to everybody else around the table, like, how do we feel about suddenly turning all of our rules into rules where there's an absolute discretion on the board, and they're basically becoming judge, jury, and executioner? Are we comfortable with that? Does that make sense? How about the author here, Robert?

 

ROBERT MULLIN: Well, the business judgment rule I think is well-- sorry, I just started talking like a lawyer. I think courts generally want to give deference to boards. They are the elected leadership of the condo. I think condos are always looking-- or sorry, courts are always looking to see that the board has acted reasonably, that they have evidence in front of them, and that they've operated in a process that's fair.

 

So discretion in a rule for me, I'm not concerned about, but I'm always looking to make sure that a board when they have exercised their jurisdiction do so in a reasonable manner that the courts can say, OK, we can back you up on that decision.

 

ROD ESCAYOLA: Interesting. Five minutes is up. So anything else you want to add, Sonja before I take the microphone away?

 

SONJA HODIS: I just want to comment on your question. I think it's dangerous to have everything discretionary because you still have to act reasonably, and it's a lot easier to enforce something that doesn't have discretion than it is. Like, a no smoking on balconies is a lot easier to enforce than, you can't smoke as long as it doesn't cause a nuisance.

 

ROD ESCAYOLA: Right. Now, yeah, I agree. And, in fact, recently I was looking at various rules that went to the CAT smoking rules, and some of them were you just can't smoke. And I'm from the school of thought-- but that's 18 years in the military. I'm from the school of thought that the best way to regulate something is just to prohibit it. You don't need a measuring stick.

 

But other rules, as you said, sort of injected this element of discretion, well, if it doesn't bug people kind of thing, and then, well, how do you deal with that? So let's move to the next person. It's Graeme. Graeme, you're going to tackle the CAT case-- Hum versus WSC-- well, I don't know which one you got--

 

GRAEME MACPHERSON: I want to do that one. think it actually ties well into this question about exercising discretion and what that means.

 

ROD ESCAYOLA: OK. So let's start with the Hum versus WSCC 670.

 

GRAEME MACPHERSON: Yeah, so, I mean, the facts of this case are not terribly complex. What this one was about was that there's a condominium corporation and it has an underground parking lot, and there's a rule there that says, quote, "the traffic and parking rules established by the board and the traffic and parking signage posted on or posted by or on behalf of the board shall be complied with by all unit owners, occupants and visitors."

 

And so basically, what the rule is that the board can post signs that say what the rule is going to be with respect to parking. And in this case, the owner Hum moved in, but about seven months before they moved in, there was a message posted on the community portal that said vehicles without passes are going to be ticketed and possibly towed.

 

Now, in this case, about one week after Hum moved in, the vehicle was parked down in the parking garage. There was a valid parking permit there, but it was in the vehicle but not being displayed. And so the corporation had the vehicle towed and ticketed. So that was challenged by the Hums who said, I don't know why you went nuclear right off the bat. We've been here for a week, and you could have but didn't just ticket us or even just give us a warning.

 

So there wasn't an argument about whether or not that rule was valid, there was an argument about, did the board enforce that rule in a reasonable way? And the tribunal found that it sort of went overboard, going the nuclear option of just having the car ticketed and towed right off the bat, especially in the context where this wasn't a chronic problem. I mean, they had been there for a week.

 

And the tribunal criticized the board for having gone nuclear right off the gun, I think there were other things that could have been done first like give the person a warning, or, I mean, if they insisted on doing something, even just starting with a ticket, and I still think that might have even been overboard given how new the situation was.

 

So I think if there's a lesson in here, it's that don't shoot first and ask questions later. In general, boards should give warnings and give heads up before it takes more drastic steps. And in rules where there is discretion given to the board as to how it's going to be enforced, like in this case ticketed and possibly towed, unless the circumstances are truly sort of out of control, I don't think it's a good idea to start as a default with the most severe penalty allowed by the rules.

 

ROD ESCAYOLA: Interesting. Interesting case. So let me ask maybe a question. I'll ask you, and then I'll ask anybody else to jump in. Did you say that-- so they had-- this is cute. They kind of had a rule which you need to circulate. You give 30 days, the owners can call a meeting, et cetera. But that rule allowed them to tweak the rule, almost not secretly, but if I post a notice on the cork in the mail room, that suddenly changes the rule on you while you got to go by these rules.

 

GRAEME MACPHERSON: Yeah, that's what the rule said, and there was no argument. So, I mean, there wasn't a finding that that rule was valid. There was just-- we're not arguing about that. The tribunal went out of its way to say we're not ruling on the validity of this, we're just going to talk about how it was enforced.

 

I personally think that's a bit loosey goosey, and maybe putting a bit too much discretion. I don't think that it's necessarily valid to make a rule that says we can make up new rules whenever we want, but--

 

ROD ESCAYOLA: Without following the process.

 

GRAEME MACPHERSON: Yeah. So I think that's walking a little close to the edge, but again, that goes to the danger we discussed earlier of maybe giving too much discretion, and having some boundaries I think is helpful not only for enforcement, but also for everyone to understand what the rules actually are.

 

ROD ESCAYOLA: Right. Right. Anybody wants to comment on that on this, the ability-- it's almost like regulations where you have-- adopting a law requires more work, and requires the approval of parliament, whereas regulation doesn't. Anybody wants to comment on that? Natalia? You have a view of the world on this one?

 

NATALIA POLIS: Well, I think it also-- it also then sort of leads to the conversation about policy versus rule, but the policy, you don't need that approval or the circulation of the notice, wait 30 days, et cetera that you do for a rule, so it's sort of circumventing going the rule process, and implementing sort of like a policy then. So in this case, it's a rule that I'm allowed to make other rules, right?

 

ROD ESCAYOLA: Right.

 

GRAEME MACPHERSON: It's kind of like the classic Jeannie wish for 1,000 wishes.

 

[LAUGHTER]

 

ROD ESCAYOLA: Nice. OK. Perfect. That's wonderful, unless anybody has anything else to say. You can raise your hand, but if you don't have anything else to say, we'll move on to the next one. And folks at home, just so you know, none of this was rehearsed. They thought that it was just showing up, they were going to talk about a case.

 

They didn't know that I was just going to heckle them actively from the sideline with questions. But that's what you get when you leave time on the table. You got five minutes per case. They're so disciplined today that they're actually leaving time for me to heckle them. Robert, we're going to move, I think-- yes.

 

So you also have two cases. I'm not sure in which order you're going to tackle them and, in fact, I actually missed one of the citations you gave us yesterday, so that one I'm going to need the citation. I got the Polchil case citation, but the other one I didn't get the citation, and I'll need that because I put it in the chat for people that want to look them up.

 

ROBERT MULLIN: Yeah, it was entirely pre-thought out. I didn't want to give you the citation so you wouldn't be able to heckle me because you haven't read the case, so I was kind of alerted that this might be coming down the pipe, so I've left you intentionally in the dark. But Sonja was very gracious today to help me with the site. It's Ottawa-Carleton Standard CC number 656 versus Denize.

 

So this is a recent case from the CAT 2022, decided, well, actually decided recently as well there was an update decision to it. So there's some cases that come down-- so this is the CAT, this is the Condominium Authority Tribunal. This is the new court that we have in Ontario that decides significant number of condo disputes now.

 

And the reason I brought this case up I think it has a big precedential value. And when I read some cases, it's always like a bit of a mystery novel. What do you think's going to happen at the end? This is one that really, I wouldn't say shook me, but I did not anticipate the result that came down the pipe. So I do think it kind of maybe moves the needle a little bit.

 

But long story short, the facts are very simple. The condo received two complaints from two unit owners about the alleged smoking of Mr. Denize. And those complaints were itemized in some 24 separate emails over a period of a year and a half, pretty standard stuff in condo setting. Two complainants giving contemporaneous emails of smoke infiltration into their abutting units. They both live beside Mr. Denize.

 

The condo then in turn wrote letters and increasing demands, standard again fare, and cease and desist smoking. Don't smoke. Mr. Denize did his defense that, I'm not smoking, and he mustered statements from his roommate that he was not smoking, and it ultimately wound up as it does now as a nuisance matter at the CAT. And the condo brought the claim against Mr. Denize to cease and desist smoking.

 

And as I'm reading the case, I was quite expecting that it was going to result with a cease and desist order against Mr. Denize based on the two complainants over a period of time, citing contemporaneous complaints. And the case, as you can probably tell, didn't go in the condo's favor, and I'm quite still surprised by that.

 

The CAT imported a new concept. I submit a new concept into the condominium setting in the condominium world, and said that a condo has now a duty to investigate. So Sonja mentioned the duty to enforce, that's correct, and that's probably codified through Section 17 sub 3 of the Condo Act that's really good reinforcement, but this I think kind of expands that section and says, not only do you have a duty to enforce, you have a duty to investigate.

 

Well, what's investigation? It really doesn't spell it out, but just taking the word of two complainants is probably no longer enough. So where do we go from here? Do we have to get more complaints? Do we have to widen the net? Do we have to test the merit of the complainants position? Do we have to get a smoke migration study going? All more work for the property manager to do, all more liability for the condo to carry.

 

Ultimately, Mr. Denize was awarded $4,000 in legal costs for having to defend against this case, but ultimately there were some other facts in the case as well. But ultimately, the CAT said just relying on two unit owners against another is no longer enough, and they have not discharged what I consider to be a new concept of a duty to investigate.

 

ROD ESCAYOLA: Wow, that's amazing a duty to investigate.

 

ROBERT MULLIN: Duty to investigate.

 

ROD ESCAYOLA: Nice. And I guess, well, the next step in that direction is going to be a duty to properly investigate, I guess, right? Because, I mean, these cases, noise cases, but also smoking cases, they always unfold kind of the same way. Unit 1 says that there's nuisance, unit 2 says, no, it's-- I'm just a perfect conduit dweller.

 

And so like to what extent do you have to investigate? Just as you said, do you need more than two complaints. I'm involved in a smoking case actually, and this time on behalf of the owners. I got to say that I always have more fun when I'm acting for the owners for so--

 

ROBERT MULLIN: We know that, Rod, we know that, yes.

 

ROD ESCAYOLA: And so it is a smoking case. And in that case, the corporation went out of its way. They kind of sent an email to everybody, including the potential smoker. Do you happen to have any complaints? Are you smelling any smoke? And I'm thinking, what the heck is that? Especially if you have to go and sort of solicit these complaints, well, maybe let some sleeping dogs lie. I don't know.

 

ROBERT MULLIN: Well, I think you're in front of a board and obviously there's zero-based budget. They want to save money, they want to show the owners that they're financially responsible, but often these situations, the case does go on about the duty to independently investigate. Well, what's that? Well, that doesn't tell me exactly, but that probably means having to hire a professional for noise or acoustical transmission or smoke migration or what have you.

 

So I think condos see the cost increase, and the next question they ask us is, can we charge it back? And since we have an Ma now we that's a much more nebulous question, sorry, that was a direct jab at Rod, good case. But it really does increase the budget, and most condos we know have an enforcement budget of about $500 annually, and that's probably not going to cut it.

 

ROD ESCAYOLA: Oh my, $500. Wow.

 

ROBERT MULLIN: Yeah, that much.

 

ROD ESCAYOLA: Yeah, that's too much money. So any thoughts from the peanut gallery on the duty to investigate? Anybody concerned?

 

SONJA HODIS: Yeah, I mean, I think when you take a look at that case, I think where the condo went wrong was that the owner who was being complained about said, hey, listen, I'm not smoking. Come in my unit. Check it out. I'll participate in any kind of investigation.

 

That doesn't cost a lot of money for a board to actually engage in that conversation, even with the person who's being complained about, and I think that was a really big mistake, and I think that's what CAT was kind of upset about. I was going to use another word, but upset about, and I think that's a good lesson.

 

Make sure you're engaging both sides to the story because not every complaint is a valid complaint, and sometimes the person complained about might have some valuable information in terms of your investigation that would get rid of the complaint without having to hire experts.

 

ROD ESCAYOLA: Right. Well, more to come because hopefully-- hopefully I'll add to that-- to your book with my next case, the case that I'm involved in right now on behalf of a smoker. So now it's my turn, but in fairness to everybody here, in full disclosure, I should say, the case, I'm going to talk about is a case where I acted for the owner, and SV Law acted for the corporation, and I only say that because, I mean, we've invited Robert, and, by all means, he's going to keep me honest.

 

This is not going to be the parade of the Victor. I'm going to present it as we saw it, but I will absolutely invite Robert to jump in if he thinks that I'm kind of twisting it a bit too far. But I think it's an interesting case, and I think it's a sad case for everybody, so it's-- I'm not gloating here.

 

So it's about the status certificate, and what it does and the importance of making sure that the status certificate is accurate because an owner or a future owner is relying on that. They get the status certificate for a reason, they pay $100 for a reason, they're looking at it, and then they make an informed decision, do I buy this unit or not? Is this unit financially healthy? Kind of thing.

 

So let me put a couple of facts here. Go back to 2017. In 2017, the condo corporation is experiencing some serious issues with their water main and their lift station. I'm hoping that Robert will tell me what the heck that is, but they are experiencing problems with that. There's discussions at the board level, that's in 2017. And 2019, then they get a quote for a partial replacement, and the quote is about $415,000.

 

In 2020, the corporation retains a consultant to look into the project. In fairness to the corporation, they're having difficulties getting quotes, and so, I mean, it's the Jell-O hasn't sort of jelled yet as to what exactly that project will mean.

 

In 2020-- in November 2020, the auditor, in their report, they flagged the fact that there's this project that's coming down the pike, and they basically say, well, so there's this work that's coming down the pike, there's a possibility of a special assessment for the owners or maybe the application of a loan to get a loan to be able to finance this. So that is in the November 2020 audited financial statements.

 

In March 2021, then the corporation goes and tenders the project. And in June 2020, '21-- I think I got a 20 too many in there. So in June, there's a unit that goes for sale. The vendor they get-- his realtor gets a status certificate. And they do this because they want to have it in hand. They don't want to wait the 10 days. So when a purchaser is interested, the purchaser asks for the status certificate, and the vendor just says, well, I've got this one, which, by the way, may not be a very good idea.

 

You may want to get your own but sometimes, at least if it's recent enough, that's good enough. And so-- and the status certificate that was issued on June 8, it says at paragraph 12, the corporation has no knowledge of any circumstance that may result in an increase in the common expenses except. And then the expense line doesn't talk about the water main. It says something like the corporation's fiscal year ends in August, and therefore, the monthly common element fees may be increased in accordance with the new budget to be determined.

 

And so that's what's in there. But the key words in there are, has no knowledge of any circumstance that may result in an increase in common expenses. And so Mr. Bruce gets the status certificate, gives that to his realtor, the realtor looks at it and the realtor says, well, the finances look in order, it seems like it's properly funded, there's nothing in there to suggest that there may be a special assessment, so Bruce makes an offer, unconditional, buys the unit.

 

A couple of days later, the corporation receives the bids for the project, and the cost is going to be $2 million, and eventually they work at passing a borrowing bylaw. So Mr. Bruce suddenly hears about this boring bylaw and say, hey, wait, wait. What the hell is going on here? I had a status certificate, and it was clean. And so that's going to be basically the question who should pay for his share of the special assessment when he relied on the status certificate?

 

Now the corporation had all sorts of arguments, and some of them to me-- I'll focus on the ones that I felt were the strongest one, and of them was, wait, wait a second. In the status certificate, attached to it, we attach the auditor's statement. And so it was in there. You could have seen that. And there's other arguments that they were raising, some of them, for instance, they said, well, we didn't know the cost. We didn't know how much it was going to cost, so what could we have told you basically?

 

Anyways, and so the question was is the status certificate accurate? The answer was, no, it's not accurate. And the next question was, does he have to pay his share of the-- of the special assessment or of the loan? And the answer was, no, he was exempt from paying because he had relied on the status certificate.

 

So I mean, to me the only-- the court repeated things that we had heard before. It's a consumer protection legislation. The status certificate must be accurate and must bring to the attention of the potential purchaser, the cost or an accurate image. And so that's not new really.

 

What may be interesting and may be somewhat new is it reiterates or it flags the fact that you don't need to know the actual cost to flag it. You should flag the fact that there's an unknown kind of thing. And to me, the most important or interesting part has to do with how do we deal with the fact that the audited statement or read was attached to the status certificate? Is that sufficient for the corporation to attach an audited statement, for instance?

 

And the courts looked at that and said, no, they should have flagged it because it's unreasonable to expect an owner or a purchaser who gets a clean status certificate. It's unreasonable to expect them to have to drill down into the fine print into the attachments to try to figure out-- to dig deeper to see if there's something behind the all clear statement.

 

So anyways, at the end of the day, it kind of means that the corporation may be on the hook for that share of the common expenses. Do you want to add something, Robert?

 

ROBERT MULLIN: I think I'll hear what the peanut gallery has to say first.

 

ROD ESCAYOLA: Yeah, that's cool. Anybody-- any reaction to this case?

 

NATALIA POLIS: Well, I agree with the outcome of the case definitely because I oftentimes get asked by my friends or relatives, hey, can you please review my status certificate when they're buying a condo? And I don't look at all of their documents. I just look at their status certificate. And if I see anything that's a red flag, then I'll say, oh, can you send me this and this to dig a little deeper into it.

 

So I do think that status certificate is an important first piece document to look at when you're making a decision, and whether or not you need more information about that purchase. So I think it was-- I think it was a good result.

 

ROD ESCAYOLA: Yeah, Sonja anything to say? Anything to add?

 

SONJA HODIS: Yeah, I mean, I think the result is good. I think it's the right result because you could easily put language in the status certificate to say, hey, this is going on. We don't know how much it's going to cost, but there could be an increase in the future. That's a one sentence thing you could have put in there very easily.

 

But what I think is interesting is what if they didn't do a special assessment, and they just had a very large increase in their monthly common expense fees because it sounds like the language in the status certificate would have covered that situation? It was the fact that it was a special assessment. So I don't know. Obviously, those aren't the facts, but it would be interesting to know how that would have turned out.

 

ROD ESCAYOLA: Right. Right. Anybody else? No. So I think it's an interesting case. Something else that I really liked about that case, and there's a bit of a victory for the corporation, the corporation said, well, wait a second though. If we take a loan to cover that portion and Mr. Bruce sells his condo in a month from now, should the next owner benefit from Mr. Bruce's victory here? Because the person that was misled and maybe the term is a bit too strong, but the person who relied on an inaccurate status certificate was Mr. Bruce, not the next owner.

 

And so his break towards the common expenses is for the duration of his ownership. I actually went way overboard, and that's because-- time wise, I mean, and so I apologize for that. Graeme, you were supposed to keep me in line here.

 

GRAEME MACPHERSON: Yeah, sorry the Oscar music wasn't doing.

 

ROD ESCAYOLA: So let's go to you, Natalia now. Let me just spotlight on you. This is something I learned to do yesterday, spotlighting people. So there it is. You are going to-- I'm not sure which one you're going to tackle first.

 

NATALIA POLIS: I'm going to do the WCC 444 and Ryan first.

 

ROD ESCAYOLA: OK, go ahead.

 

NATALIA POLIS: So this case actually does tie-in nicely to the case that Rob was discussing about the duty to investigate. So this case, your condominium corporation number 444 and Ryan, it was a decision before the condominium authority tribunal, and this decision found that in certain circumstances harassment can include conduct that is a nuisance, annoyance, or disruption, despite harassment itself not being a proscribed or prohibited activity under Section 117 2 of the Condominium Act, which is what the tribunal has jurisdiction over.

 

So the facts of this case are a little bit complex. It was initially-- the application was commenced against two unit owners, one being a smoker, and the other complaining about the smoker. The complaints went so far as to be harassing conduct, yelling and shouting at the alleged smoking unit through the common elements, posting notices on her door, in the hallways, defacing her children's notices that were posted on the common boards, a slew of different other harassing behavior.

 

The condominium corporation who we represented ended up settling with the alleged smoker, so her name was Powell, in stage 2 mediation. In this condominium corporation, there isn't any rules that strictly prohibit smoking, and on just touch on Rob's case, the condominium took multiple steps to try to investigate whether there was smoking. So we advised the complainant to contact the superintendent to come up and actually go into your unit to try to verify if there was the smoke transfer between the units, and the unit owner, Ryan, wouldn't permit the superintendent to access the unit.

 

When you went in the hallways, you couldn't smell anything. We even at one point got a security guard posted up in the hallway of the fifth floor where both of the unit owners resided to investigate whether there is this smoking, but also to provide some sense of security for the complainant that was alleging the harassment.

 

Start stage 3, so at the adjudication portion of the application, there was a preliminary issue regarding jurisdiction. So the tribunal requested that the parties make submissions on whether CAT has jurisdiction to hear disputes relating to harassment or whether those fall under Section 117-1 of the Condominium Act. If they fall under Section 117-1 of the Condominium Act, the tribunal would not be able to hear this application, and it would have to go to court.

 

So the tribunal ultimately found that in this case, in these circumstances, it did constitute harassment on her behavior, and it was something that the tribunal had jurisdiction over. In the decision, the CAT member made a really interesting distinction between subsections 117-1 and 2. So I'm just going to read a little portion of the decision.

 

So in the decision it reads-- the amendments of section 117 and the addition of regulation 117 9-17, which established the tribunal's jurisdiction to deal with certain nuisances annoyances and disruptions, have created a potential overlap between the conduct addressed in sections 117-1 and 117-2 of the act.

 

Considering harassment in particular, it can be both a tactic or form of conduct, and it can also be an end. For example, a person may attempt to harass by engaging in conduct that is a nuisance or annoyance or disruption. In that case, if the conduct falls within subsection 117-2 or subsection 1-1 of regulation 117 9-17, then the tribunal would have jurisdiction over the dispute.

 

Looking at the two subsections, the dividing line is the likelihood of physical injury, illness, or damage to property. So if there was a more serious consequence, in this case, there wasn't, then it would fall under Section 117 1, and it would go to the courts. In this case, the conduct, as I mentioned, was the respondent screaming in the hallways, yelling at the other owner and her children posting notices, and so forth.

 

So it wasn't anything that actually had the potential of property damage or illness or injury. So it wasn't as much of a serious consequence, or at least the tribunal didn't think so. So CAT held that harassing someone may invoke conduct that is a nuisance, annoyance, or disruption, and they found that although this is not a prescribed nuisance, CAT may have jurisdiction over these disputes, and they specifically noted it really depends on what the corporation's governing documents say.

 

In this case, the corporation had extensive rules that prohibited this type of conduct, prohibited posting notices on common elements, prohibited obviously noise and screaming, but specifically prohibited harassing behavior, whether to others in the corporation, to management, and the staff, and so forth. So they had specific wording that prohibited this type of behavior.

 

ROD ESCAYOLA: OK. Wow. So, well, is the appeal period over before I start commenting on that?

 

NATALIA POLIS: No, it was just released. Yeah, it was just released, so we got to be careful. I don't want to drum up some business. I actually agree with the outcome, but I'm very surprised to hear that the CAT would include as part of its jurisdiction a nuisance that's not prescribed, that's not expressly listed. I mean, so the jurisdiction of the CAT over nuisances is noise, which is not prescribed, it's in the act, and then there's a list of nuisances-- smells, smoke, light whatever it is.

 

So even if harassment was to be found to be-- to constitute a nuisance at common law, I don't see how the tribunal will have-- will have jurisdiction over that. Well, they obviously went that way. So that's their decision. Any reaction from the rest of the peanut gallery. Am I in La La Land here? Or am I just upset because I didn't get that case? Is that was happening? Sour grapes?

 

GRAEME MACPHERSON: I'm with you on all fronts. I think this was the right outcome. I'm also a little surprised because, I mean, it arguably opens the door to, if this is considered a nuisance, what else could we consider a nuisance, and therefore fit under the jurisdiction of the tribunal? But, I mean, that said, I do think at the end of the day, the outcome of this case was absolutely the right one.

 

ROD ESCAYOLA: Go ahead, Natalia. And I know it's your case, so, I mean, congratulations. This is a tremendous victory for your client. So yeah, any other reaction?

 

NATALIA POLIS: Part of our submissions during the case, we're just honestly listing off dictionary definitions of what harassment is which includes disrupting behavior, annoyances, disturbances, which literally the tribunal has jurisdiction over. So I think that might have swayed the tribunal to hear this case, and actually make a decision on it.

 

ROD ESCAYOLA: OK, well, I'm done scratching at the surface. But next time we see each other I want to discuss this further, Natalia, because, I mean, I really like the, as I said, the outcome, and who knows? Maybe it's opening the door a little bit. We're running out of time very quickly here just because I'm heckling too much. Who's next?

 

I'm going to go back to you Sonja for your next case, I'm going to maybe reduce the time to three minutes and a half now. That's what I'm going to be-- even that, so go ahead.

 

SONJA HODIS: Great. Three and a half minutes. All right. So and you didn't even tell them what the case was, so I have to spend some time doing that. It is TSCC 2804 and Micoli, and the reason I wanted to talk about this case because there's a lot of criticism about the cases that come from CAT.

 

And finally, I find that this is like a ray of hope, this case, that maybe we are going to slowly move back to pre-CAT days where the court recognized that innocent owners should not be saddled with the costs of enforcement because of one owner or occupant who is deciding to breach the rules.

 

And what we have in this case, and I'm going to have to do it really quickly, is we have a result where the amount of compensation that the tribunal awarded to the condo who was successful in the compliance application, and the amount of costs that were awarded to the condo, are getting very close to what we would see in the court system on a partial indemnity basis. And that's really nice to see that it's moving in that direction, and it's nice to see that the CAT is not just citing the innocent owner principle, but actually applying it.

 

Having said that, I tried to use the Micoli case in a recent case that I was involved in, and, unfortunately, and this is what we see at the CAT all the time, not all adjudicators follow the same path. They totally approach costs from a totally different way that the adjudicator and Micoli did, and I wasn't as successful in the percentage of costs that was recovered.

 

The interesting thing about the way they approach costs in Micoli is they basically looked at all of the costs before stage 3 on an indemnification provision in the Declaration, and so they looked at it as damages, and what do the governing docs say about indemnification.

 

And then they looked at the stage 3 costs as costs under the rules of practice at the tribunal. So that's another interesting thing that comes out of the case. The way they have dealt with the costs, but I can tell you it's not consistently applied across all of the adjudicators at CAT, which is unfortunate because it's really hard to advise clients when not everybody is sort of playing by the same rulebook. Did I do it under three and a half minutes there?

 

ROD ESCAYOLA: You're amazing and you're not going to get any heckling because we're sort of short on time, but that's-- and I agree with you. It's very hard to predict right now the direction that the CAT will take on numerous fronts, and which is going to make Robert's life more exciting for your book, Robert. You're just going to have to have-- use the famous-- well, it depends. That's what you should-- this is how you should open every chapter.

 

ROBERT MULLIN: Well, it's interesting that the good old days when you read through them where the Skyline case was employed which said that the innocent owner should never have to pay. Those cases were very consistent but they also consistently said that the costs were unreasonable. And then lowered the cost award.

 

So it's kind of like-- I'm a little jaundiced of the good old days, maybe weren't as good as they were. I think Sonja is absolutely right. We need change in this, but I really think we have to encourage the boards we work with to say you have to budget for this, and this is part of the cost of doing business. And you might not get full recovery, but you still have to do it.

 

ROD ESCAYOLA: Yeah. Yeah, agreed. Graeme you're next you're going to be talking about, I guess the 843 Tacori case, another parking case?

 

GRAEME MACPHERSON: Yeah, and I'll keep it to three and a half minutes or less. So this case answers the age old question, do three motorcycles equal a car? Basically, in this case, there was, again a parking garage, and the declaration at this condo had some very specific language. It stated that each parking unit shall be used and occupied by one motor vehicle, and it went on to define that a motor vehicle includes a motorcycle.

 

Now the owner at the other end of this case was the owner of three motorcycles, and he was putting them all in one spot. The corporation wrote him a whole bunch of letters asking him to move them. He didn't respond. The corporation then retained its lawyer who sent him a whole bunch of letters asking that he move them. He didn't respond.

 

So then a CAT process was started, the tribunal process. He didn't respond. The tribunal actually reached out to this individual over the phone and he did pick up the phone and said, yeah, yeah, OK, sorry, I'll respond, and then he didn't. So it ended up going forward without him.

 

Now I think unsurprisingly, the tribunal found that he was in breach of the rules and/or the declaration and made an order that he comply going forward. As with the case we just heard about from Sonja, in this matter, the tribunal actually did order effectively partial indemnity, and gave the corporation about two thirds of its legal fees back. I think that was in large part because of the chronic non-compliance and non-participation from the owner.

 

So again I think the lessons learned from this case are, in general, again, the corporation was successful here because it did not shoot first and ask questions later. It took steps, it tried to make warnings, and in the end it was rewarded for its steps that it took to try and deal with this before escalating it. The CAT did recognize all of those warnings and attempts to deal with it first.

 

I think the other lesson here is that another part of the reason the corporation was successful is because it did have very particular language in its governing documents. So if you are going to attempt to enforce something, just make sure that your governing documents actually say what you are-- what you think they say.

 

And if your declaration-- if you're talking about parking or something, if your declaration doesn't go as specific as you'd like, and if you would like to change what the parking structure is, the rules can do that. You don't have to amend your declaration so long as your rules don't say anything contrary.

 

And lastly, the last rule, kind of an obvious one, but to any owners or any board members or corporations or managers listening, if you get a CAT notification that a proceeding is starting against you, don't ignore it like it's the pile of laundry on your chair in your bedroom. You have to answer it. It will not simply go away.

 

ROD ESCAYOLA: Sounds like you're speaking from experience. So next episode, Graeme is going to take-- is going to add the third case to complete the trilogy of the parking cases, and it's a case where size matters when you're dealing with trucks that involved a condo lawyer in his capacity as a president of the corporation with a measuring tape, but that's for a different day. And I'm just making fun of the person now just because they're not here to defend themselves. Oh, well, hopefully they're not watching.

 

Next. Who's the next one? I lost my notes here. I get so excited. Robert, it's your turn. So you spoke of the Denize case, now it's the Polchil case.

 

ROBERT MULLIN: Yes, I'll be very brief. The Polchil case is a Superior Court case, so we're now out of CAT. We're in full Superior Court. We're in the highest trial court in Ontario. Polchil was the applicant. It was the corporate owner of two units within a Condo Peel CC number 245.

 

Polchil allegedly asked for permission to essentially rip their two units apart on a renovation. Made a phone call to the property manager. It's in dispute how the conversation went, but Polchil heard that there was an approval, the property manager of course heard that there wasn't an approval. Polchil went in and ripped the unit apart, two units, affected structural matters, smoke detection, safety concerns.

 

Property manager is alerted to this issue well into the process, makes entry into the unit and sees two units essentially ripped apart and sees a host of safety concerns when he made entry. The response from the property manager was to wait for it, padlocked the door, for a period of 18 days.

 

So some cases I'm surprised by the results, some cases I'm surprised by the facts. This one surprised me on the facts. I don't want to be judgmental because we all get on both sides of these issues, and certainly have many more for me as well, but the manager had locked the door.

 

Polchil says, time out, that was oppressive, and brings an application in Superior Court in keeping with 135 of the Condo Act, which is the oppression provision. You're probably not surprised, but the Superior Court said, yes, being padlocked out of your units is oppression. You have a right to make entry and use your unit.

 

Wasn't very sympathetic to Polchil. Said you didn't get approval and you didn't follow the process, and there's a whole bunch of sundry things you didn't do right, but it doesn't justify the condo padlocking someone out of their unit. The court gave a nugget of a quote at-- well into the judgment.

 

I'm not going to read it all, but I'll paraphrase, and said essentially that self-help remedies like padlocking beget more self-help remedies. And that if you continually escalate that in the environment, you will lead to violence because someone is going to push back, someone is going to shove, and there is going to be an escalation.

 

You have a process in Superior Court, you have the process of the CAT, we have no lack of procedures for dispute resolution in Ontario. Mediation, arbitration, CAT, Superior Court, human rights, you name it. There's lots of places we can go to the wicket to complain about conduct that we've seen. The court said, use them, but padlocking the door is not appropriate, and ordered $10,000 in general damages against the condo for the behavior.

 

So padlocking is one thing, but the precedential value for me is a great reinforcement that self-help does not have a place in condo, and that we have processes in place the condo could have easily gone to a Superior Court on an emergency injunctive basis, but there was a lot of remedies available to the condo, they didn't use them.

 

ROD ESCAYOLA: Well, that's an amazing case actually. That's very interesting. Just as you said, sometimes we're surprised by the outcome, but sometimes we're surprised by how we got there to begin with. Natalia, you-- about have a minute and 35 seconds for your case. Can you squeeze it in?

 

NATALIA POLIS: I'll try. So this case is Seabright in Toronto Standard Condominium Corporation 1793, and another Condo Corp 1808. So in this case, the applicant, and again it's a tribunal matter, the applicant brought an application to the CAT with respect to allegations of unreasonable noise from the grates, along with smoke, noise, odor from the condo corporation's industrial vent.

 

There are two issues-- the grate noise, and the odor, smoke, et cetera from the industrial vent. The tribunal asked, and this is a motion order, the tribunal asked for submissions on jurisdiction, so again another jurisdictional item. And ultimately they found that the grates that were alleged to be causing the excessive noise were a maintenance and repair issue that the tribunal did not have jurisdiction over. Something that's under sections 89 and 90 of the act, the tribunal doesn't touch those sections.

 

And we've been seeing a lot of these cases come about recently in the CAT where an owner complains about mechanical noises, elevator noises, and so forth, and the CAT ultimately dismisses the application saying that we don't have jurisdiction over it, we're not going to decide these issues.

 

The problem with that is in some cases, the parties get all the way to stage 3 of the application, spend tens of thousands of dollars in legal fees only to have it dismissed, and the owners are now able to take it to mediation and arbitration, or if they could try to squeeze it into the courts, adding two additional legal fees.

 

So in this case and other cases similar to it, the dismissal may seem like a short-term win because they may pursue this further, and further legal costs will be incurred by corporations. So I do think CAT needs to come out with some sort of direction as to what are they going to hear in terms of noise and vibration issues. So hopefully that was a minute or less.

 

GRAEME MACPHERSON: Rod, you're muted.

 

ROD ESCAYOLA: There it is. I'm back. Hello, everybody. No, it wasn't under a minute, but it was a very good-- very good fast, and furious summary. So folks, you know me, I like to put people on the spot, I promised her she wouldn't have to speak at her first webinar, that all she would have to do is just say hi at the beginning, and then watch everybody else fight it out. I lied.

 

The reality is that I'm going to turn to now our brand new condo geek, Nalia, and I'm going to ask her-- let me think here. Well, I guess Candidate Day is just around the corner, so how about we grill her on that? Can I put a Canadian flag on my balcony this week?

 

NALIA: I mean, that's a very great question, and thanks for putting me on the spot, but I do have the answer. So there is the National Flag Act that we have, which essentially-- that encourages people to hang our national Canadian flag. The issue is when you hang a flag on a common element on the condo property. So as a condo owner, you have exclusive use and ownership of your unit, but you don't have that for the common elements.

 

So for example, if you were going to drill a pole into the ground on the concrete outside and hang a flag or go on the rooftop and hang a flag off the rooftop, you technically would not be able to do that. You can't hang your flag on a common element without the permission of the condo corporation, and essentially entering into a type of agreement with them, which is going to map out the rights and obligations of you hanging that flag on that common element in terms of repairs to the common element when you do remove it.

 

So the short answer is condo corporations can't technically prohibit you from hanging your flag, but they definitely can regulate it as in telling you that you can't hang it on a common element, or the size of the flag that you can hang. So that's the answer to that.

 

ROD ESCAYOLA: And in October, I'm going to ask you the same question, but except with pumpkins, and how quickly you have to take the pumpkin back in. So yeah, that's not be party poopers about the Canadian flag, big fan of it. Probably best to regulate rather than litigate it. Yeah, perfect.

 

Well, it's-- we got one minute to go, and so I'm going to go and do my usual going around the table thanking everybody for their amazing participation and very generous time with us today. And I'm going to start with you Sonja, and I hope you're going to accept our invitation for the Jeopardy episode when-- next December.

 

SONJA HODIS: Oh, wouldn't miss it. I'm going to win this year for once.

 

[LAUGHTER]

 

ROD ESCAYOLA: Any parting words for the summer, Sonja?

 

SONJA HODIS: Just enjoy your summer, everyone. It's short, and get out there and enjoy the sunshine.

 

ROD ESCAYOLA: OK. Wonderful. Robert Mullin, the first time on this. I hope you enjoyed it. I hope you'll come back. I'm just trying to remove Nalia from the screen. She's still highlighting the spotlight. So thank you, Robert, for your time, and any parting words or words of advice for the summer?

 

ROBERT MULLIN: Did I miss in the shuffle your favorite drink? I don't recall-- did I hear that? I think I missed that.

 

ROD ESCAYOLA: Yeah, I think I forgot to mention it. Campari soda any day of the week, for the summer anyways.

 

ROBERT MULLIN: A Campari soda?

 

ROD ESCAYOLA: Campari. Campari soda.

 

ROBERT MULLIN: Oh, Campari.

 

ROD ESCAYOLA: Yeah. Yeah. So there it is. Well, thanks again, Robert, and hopefully you'll come back next June or maybe this December for the Jeopardy game.

 

ROBERT MULLIN: Pleasure to be here.

 

ROD ESCAYOLA: And who else do we have around the court. Oh, my favorite. I know and I say that everybody-- Natalia, thanks so much for being such a trooper. Every time that we invite someone, she's always the first at the door, even though today I said I didn't agree with her case. But thank you much. Thanks so much for joining us.

 

NATALIA POLIS: Thanks for having me, Rod.

 

ROD ESCAYOLA: Any words of advice or parting words for the summer?

 

NATALIA POLIS: Well, I just. I just want to echo what Graeme said earlier about getting a notice of case from CAT. Do not ignore it because I've had many situations where managers come to me 10 days late after the notice is received and they haven't joined the case yet, and we're now in mediation or it's stage 3. So just don't ignore any CAT notices.

 

ROD ESCAYOLA: I can't believe you just mentioned mediation at the CAT. I'm having PTSD symptoms now. Next time, we're going to talk about that. Now, going to you, Nalia. Thanks so much for the little quick blurb on the flag. I see that you've read my blog. This is fantastic. And so any words of advice or parting words for the summer? What are your plans?

 

NALIA: My plans are to be here and [INAUDIBLE] to soak up the sunshine. So that's my summer.

 

ROD ESCAYOLA: Nice. Yeah, well, you can do that as long as you're docketing and billing. You can take all the sun you want. And Graeme, last but not least, words of advice for the summer.

 

GRAEME MACPHERSON: My word of advice for the summer is regardless of if you have a mojito or a Campari soda or a Molson Canadian, really do take the time to enjoy it because before you know it, we will be back in Canadian November.

 

ROD ESCAYOLA: Right. And, I mean, interesting words of advice from you on this solstice day because when we ask you for words of advice at the winter solstice, I think it went along the lines of don't eat the yellow snow. I think that's what were your words of advice at the time.

 

GRAEME MACPHERSON: Well, that's right. It is solstice. My other advice is enjoy the solstice because the days are going to start getting shorter now.

 

ROD ESCAYOLA: There's a beacon of light. OK, everybody. So thanks so much for joining us. Next webinar, apparently, I've just been advised it's September 6. Have a great summer. Be safe on the roads, on the lakes, and we will see you when September rolls around. Thanks, everybody.

 

Oh, no, to register to the webinar, you know the drill. You got to go and click on the webinar, and it's going to be posted, and there's going to be instructions on how to join our webinar. I'm looking for the jingle.

 

[MUSIC PLAYING]

 

GRAEME MACPHERSON: There it is.

 

[MUSIC PLAYING]