The Impact on Your Condominium Corporation – Part V

Rather than act to clear up this apparent confusion, however, Mr. Swan took a confrontational approach with the property manager, and later with Ms. Goan when she tried to intervene. This confrontational tone persisted until after a board meeting at which the plaintiff was elected president of the corporation by the board. Following his election as president, the plaintiff unilaterally wrote to all unit owners, alleging that the board was dysfunctional and that the property manager was incompetent. In this latter regard, the plaintiff began making efforts to gain control of the corporation’s documents from the property manager despite the lack of a board resolution authorizing him to do so.

As a result of these and other unilateral activities by Mr. Swan, the board ceased being able to effectively govern the corporation. With the assistance of legal advice, Ms. Goan then proceeded to organize a requisition for a meeting of owners for the purpose of voting on Mr. Swan’s removal from the board. The requisition was signed by the required number of unit owners, and a copy of the requisition was delivered to the plaintiff. As a result of the organizing and delivery of the requisition, a meeting was held, at which a majority of owners voted to remove the plaintiff from the board of directors.

The plaintiff’s five claims against the various defendants all stemmed from what the plaintiff alleged to have been the defendants’ defamation of him in connection with the authorship, distribution and delivery of the requisition. At trial, the court held that the complained of statements were true and, in any event, that the defence of fair comment (which applies to honest expressions of opinion, based on true facts and made in good faith on matters of public interest) was available to the defendants. The court further held that the defence of qualified privilege (relating to a legal or other duty to communicate the complained-of statements to persons with a corresponding duty or interest to receive same) applied to the defendants. Finally, the court held that, in the event it was wrong in these conclusions, the plaintiff’s damages in this matter amounted to a total of $2.00 . All five claims were dismissed.

Author’s Note: the word “defamation” is used somewhat frequently in a condominium context, particularly in situations where two or more groups are competing for control of the corporation. Although this situation is different, it is nonetheless instructive to note the court’s analysis of a defamation claim arising from a requisition for removal of a director. In dismissing the plaintiff’s claims, the court placed a fair amount of emphasis on the fact that Ms. Goan, in the course of preparing the requisition, consulted with a lawyer. This fact was taken as evidence of, among other things, Ms. Goan’s good faith in preparing the requisition for Mr. Swan’s removal. Further, in light of the decision in this case, any unit owner organizing a requisition should be careful to stick to the facts in doing so, and should refrain from any conduct that could be interpreted as malicious.

Chan v. Toronto Standard Condominium Corp. No. 1834 (Ontario Superior Court of Justice, January 6, 2011)

This was an application by Ms. Chan, a unit owner, and a counter-application by the condominium corporation. Ms. Chan sought the removal of a lien that had been placed on her unit by the corporation. The corporation, in turn, sought orders requiring Ms. Chan to comply with the corporation’s declaration and rules.

The lien on Ms. Chan’s unit arose as a result of a leak from the valve on the toilet in her unit. The leak caused water damage in the unit below, a portion of which damage was covered by the corporation’s policy of insurance. The corporation also incurred costs to repair the portion of the damage that was not covered by its policy of insurance. The corporation, in reliance on the Condominium Act, 1998 and on the corporation’s declaration, added these costs, together with its insurance deductible, to the common expenses payable for Ms. Chan’s unit.

Ms. Chan claimed that the corporation had not adequately established that the leak originated from her unit, and relied on the report of a plumber to advance the alternate theory that the leak had originated from damaged common element pipes inside a wall. However, the evidence established that Ms. Chan’s toilet valve was known to have previously leaked, and the plumber’s report was made more than six months after the leak in question. On that basis, the court rejected Ms. Chan’s explanation for the leak, and accepted that the leak had come from her toilet valve. Accordingly, the court held that the lien on Ms. Chan’s unit was valid, and dismissed her application.

On its counter-application, the corporation sought two orders. The first order sought was in relation to locks that Ms. Chan had placed on the interior doors in her unit. The
corporation’s rules prohibited the installation of any additional locks on any doors to or in a unit without the prior consent of the board of directors of the corporation, and required any unit owner who obtained such consent to provide the corporation with keys to all such locks. Ms. Chan had placed locks on the doors to the three bedrooms in the unit without the consent of the board, and had refused to provide the corporation with keys to such locks. As justification for this position, Ms. Chan claimed that building staff had trespassed in her unit on several occasions, after which she and her son decided to move out of the unit and lease same. However, the court held that this story was not credible, and ordered Ms. Chan to remove all locks on all interior doors in her unit.

The second order sought by the corporation was in relation to the lease of Ms. Chan’s unit to three tenants. The corporation’s rules provided that each unit was to be used only as a private single-family residence. Despite this rule, Ms. Chan had leased her unit to three unrelated tenants. Ms. Chan claimed that the three tenants were living together as friends, and, on this basis, their tenancy should not be deemed to contravene the private single-family residence rule. However, relying on the court’s decision in Nipissing Condominium Corp. No. 4 v. Kilfoyl, the court rejected this submission, and held that Ms. Chan’s lease of her unit to three unrelated tenants breached this rule. The court accordingly ordered that this improper use of Ms. Chan’s unit cease immediately.

Given the corporation’s complete success on the application and counter-application, and what it referred to as Ms. Chan’s “persistently non-compliant conduct”, the court ordered costs in favour of the corporation on a full indemnity basis.

Author’s note: The result in Chan is interesting against the backdrop of the Kilfoyl line of cases for at least two reasons. For one, the “private single-family use” provision in Chan appears to have been contained in the rules alone, whereas in Kilfoyl and other cases the provision was contained in the respective corporation’s declaration or jointly in the declaration and rules. This suggests that a corporation could pass a rule preventing “rooming house”-type tenancies and such a rule would be upheld by the courts, although there could be a separate issue with “grandfathering” existing tenancies at the time that such a rule would be passed. 

For another, the court in Chan adopts the definition of “family” set out in Kilfoyl as meaning “a social unit consisting of parent(s) and their children, whether natural or adopted, and includes other relatives if living with the primary group”. This is interesting because that definition was specifically set out in the declaration for the condominium corporation in Kilfoyl; one could argue that the court in Chan erred in interpreting Kilfoyl’s acceptance of that definition in that particular case as a general endorsement of that definition to be applied to other cases. Nevertheless, the court’s acceptance of that definition provides condominium corporations with some guidance moving forward with respect to how “private single-family residence” provisions are likely to be interpreted by
the courts.