Decisions From the Courts: The Impact in Your Condominium Corporation

Author’s Note: It is important for managers to recognize the importance of registering certificates of lien in a timely way. However, failure to do so does not extinguish the debt owed by unit owners to the condominium corporation. The courts can order a defaulting unit owner to pay unsecured common expenses and costs to the condominium corporation and have this amount added to the unit’s common expenses, once again making the debt subject to the lien provisions under the Act.

Petersen v. Proline Management Ltd. (British Columbia Court of Appeal, December 29, 2008)

In the summer of 1997 Rose Petersen purchased a ground floor unit in a condominium. After her purchase, she became aware that the wall at the edge of her patio was only 26 inches high and overlooked an open stairwell. In November 1997 Ms. Petersen wrote to Proline, the corporation’s management company, regarding this issue. At the November board meeting, Proline was instructed to deal with the issue and remedy the problem.

The issue was raised at board meetings in January, February and April of 1998 and was deferred on each occasion. Ms. Petersen wrote to Proline again to complain at the end of April 1998 . Finally, management called the city building inspector and was advised that a 42 -inch railing was required by the building code. The manager then advised Ms. Petersen that he would have the railing installed. At the end of May, Proline advised the board that the wall needed to be fixed. Proline was then directed by the board to have the railing installed. Unfortunately, due to several delays and inactivity on the part of Proline, the railing was never installed.

On August 4, 1998 while in a state of drunkenness, Ms. Petersen fell 13 feet from her balcony into the concrete stairwell and suffered serious injuries. She commenced an action for negligence and breach of contract against the management company and the condominium corporation for damages due to personal injuries. Unfortunately, because of the length of time it had taken Ms. Petersen to commence her case, the action was dismissed due to the expiration of the limitation period insofar as the claims were advanced in contract and tort. However, the trial judge granted Ms. Petersen permission to amend her claim so that she could plead that her injuries were caused by a breach of fiduciary duty by the management company and condominium corporation. The trial judge dismissed the claim for breach of fiduciary duty. Ms. Petersen appealed.

Quoting an earlier case, the court looked at the meaning of fiduciary relationship, and stated that “the essence of a fiduciary relationship is that one party exercises power on
behalf of another and pledges himself or herself to act in the best interests of the other.” The court went on to say that in this case, neither the management company nor the condominium corporation assumed or accepted any power or discretion to act on Ms. Petersen’s behalf or in her best interests. Their relationship to her was defined by the bylaws of the condominium corporation,which obligated it to maintain the railings and its control and occupation of the common elements. The court maintained that neither party had any power to act on Ms. Petersen’s behalf that would create a fiduciary duty.

The court held that there was an obvious cause of action for Ms. Petersen’s injuries in contract and tort (negligence) and that her claim for breach of fiduciary duty was an attempt to overcome the limitation period, which had otherwise barred her action.

Author’s Comment: The case suggests that a management company will not be found to owe a fiduciary duty to residents of a condominium corporation. Instead, its obligations will be based in tort and in contract. Although it was unfortunate that Ms. Petersen had missed the limitation period for bringing a claim in either contract or tort, she could not create a fiduciary duty where none had existed simply to defeat a limitation defence.

Metropolitan Toronto Condominium Corp. No. 932 v. Lahrkamp (Ontario Superior Court of Justice, April 28, 2008)

The condominium corporation made the decision to renovate its lobby in order to accommodate access for disabled persons, the elderly and for people with packages. Michael Lahrkamp, a unit owner and selfstyled watchdog, did not agree. Relying upon his right to inspect records under s. 55 of the Condominium Act, Mr. Lahrkamp requested a very significant volume of documents. He pestered the staff in the management office relentlessly about the documents. He requested information and answers to questions and requested the right to attend and address board meetings. He commenced five small claims court actions against the condominium corporation alleging a failure to provide the requested documents, many of which could not exist. Ms. Hodges, the onsite administrator, stated that she felt harassed and that she could not carry on her daily activities. She further stated that Mr. Lahrkamp’s behaviour was continuous, and included banging loudly on the management door and blocking the door to the office where the administrator was working.

The court held that Mr. Lahrkamp was entitled to express his opinion about the board and the lobby renovation. However, the court was of the opinion that his conduct towards the management staff amounted to harassment. With respect to records, the court stated that although the Condominium Act gives Mr. Lahrkamp the right to examine records of the condominium corporation, he was not entitled to abuse that right by conducting a campaign by siege against the management office. The court made an order that Mr. Lahrkamp be restrained from all communication with any employee of the management office other than in writing, that he be restrained from entering or coming within 25 feet of the management office and that all requests for records be in writing and that he not make more than one request with respect to the same record.