Saturday, March 5, 2011

Hoarders, Disorderers and the Public Health Act (Alberta) and the Role of Alberta Health Services

I am always pleased when I acquire greater understanding of areas of the law which have impact on condominium corporations.   Over the last few months I have had the opportunity to review the Public Health Act  (Alberta) and learn how this act has been applied by Alberta Health Services.  The comments which follow are a summary of legislation and process followed by Alberta Health Services when dealing with a condominium unit which has not been well maintained and may have become dilapidated by a hoarder or disorderer.

The Nuisance and General Sanitation Regulation passed pursuant to the Public Health Act  states in section 2, among other things, that "no person shall create, commit or maintain a nuisance" and that a "person is deemed to have created, committed or maintained a nuisance" if:
  1. any premises that is in a condition;
  2. a sink, privy (I think this means bathroom), urinal, or drain in a condition; or
  3. any accumulation, a deposit of offensive matter, waste or manure wherever situated;
"that is or might become injurious or dangerous to the public health or that might hinder in any manner the prevention or suppression of disease".

Pursuant to section 60 of the Public Health Act, if Alberta Health Services is advised of a potential nuisance and "an executive officer believes on reasonable and probable grounds that a nuisance exists in or on a private place or that the private place or the owner of it is in contravention of (the Public Health Act) or the regulations, the executive officer may, with the consent of the owner or pursuant to an order", among other things, "enter in or on the private place at a reasonable hour and inspect it".

The Public Health Act reference to an "executive officer" translates into a senior employee so designated by Alberta Health Services.  If after conducting an inspection the executive officer forms the opinion that there is "reasonable and probable grounds to believe that a nuisance exists" then the "executive officer may issue a written order in accordance with this section".  An executive officer's order is very powerful and pursuant to section 62 can include, without limitation:
  1. requiring the vacating of the place or any part of it; 
  2. declaring the place or any part of it to be unfit for human habitation; 
  3. requiring the closure of the place or any part of it;
  4. requiring the doing of work specified in the order in, on or about the place; and
  5. requiring the removal from the place or the vicinity of the place of anything that the order states causes a nuisance.
These provisions in the order can be summarized as leading to a condemnation of the condominium unit and identifies the work that needs to be done by the owner to bring the condominium unit back into reasonable condition.  Further power in the order comes from the threat in section 63 of the Public Health Act.  This section provides that if the owner of the condominium unit subject of the executive officer's order fails to do the work "the executive officer or a person appointed by the executive officer may, together with any persons that are necessary, enter the public place or private place and carry out the order".   The Public Health Act also provides that the expenses incurred in doing the work, if not paid within 60 days after a demand for payment, may advise the municipality in which the condominium unit is located within and the expenses incurred shall be added to the tax roll as an additional tax against the condominium unit and "forms a lien on the land in favour of the municipality".  This means that the municipality would have a first charge against the condominium unit in priority to all other claims including the condominium corporation and any lenders.

Based on this legislation one would think that once Alberta Health Services inspects a hoarded or disordered condominium unit and issues an executive officer's order that condominium corporations could expect that if the owner does not comply with the executive officer's order that Alberta Health Services will then do the required work.  Curiously what I have recently been advised is that this is not the preferred route of Alberta Health Services.  Instead the preference of Alberta Health Services is that the subject condominium unit is secured pursuant to the executive officer's order and the owner is denied access to the subject condominium until the work ordered to be done has been done by the owner.  Notwithstanding this powerful remedy, Alberta Health Services has advised that it would rather not have to do the work.

This creates a situation where the remedy of the condominium corporation may, because of deficiencies in the condominium corporation's bylaws, be less powerful than that of Alberta Health Services.  This raises the question of whether the involvement of Alberta Health Services outweighs the potential detriment of the issuance of an executive officer's order.  In this regard it is important to understand that executive officer's orders which condemn properties are listed, amongst other orders, on Alberta Health Services website and are accessible to all persons.

A failure by Alberta Health Services to do the required work if the owner will not or does not creates a situation where responsibility for dealing with the dilapidated condominium unit shifts to the condominium corporation.  This in turn will lead to a review of the bylaws by the condominium corporation to determine the remedies available to the condominium corporation.  Ideally the bylaws provide that the condominium corporation may do the work subject of the executive officer's order (this is usually after a demand to the owner has been made) and that the amounts of money expended in doing the work shall be added to the condominium contributions payable by the owner of the dilapidated condominium unit.  Without this provision in the bylaws a condominium corporation may be left with its expenses becoming an unsecured debt without priority over other instruments registered against the title to the dilapidated condominium unit.

Sunday, February 27, 2011

Reimbursement by an owner of a condominium unit of the payment of an insurance deductible by the condominium corporation

It is settled law that condominium corporations in Alberta are not permitted to sue an owner for loss or damages caused by an owner if such loss or damages are required to be covered by insurance placed by the condominium corporation.  However, the law is not as clear in respect of whether a condominium corporation can seek reimbursement from an owner of a deductible which has been paid by a condominium corporation pursuant to an insurance policy in respect of an insurance claim made in respect of the owner.  It is suggested that in light of recent decisions of the Alberta Courts that the ability to claim reimbursement is dependent on the manner in which such obligation is stated in the bylaws of the condominium corporation.

Section 47 of the Condominium Property Act (Alberta) requires, among other things, that condominium corporations “place and maintain insurance on the [condominium] units, other than improvements made to the units by the owners, and the common property against loss resulting from destruction or damage caused by any peril prescribed by or otherwise required by the regulations to be insured against”.  Section 61(1) of the Condominium Property Regulation (Alberta) lists the perils which must be insured against and references “any other perils as required in the bylaws”.

The Honourable Mr. Justice Jean Côté of the Court of Appeal of Alberta in Condominium Corporation No. 9813678 v. Statesman Corporation, 2007 ABCA 216  allowed an appeal by the appellant and developer, Statesman Corporation, and concluded that the lawsuit of Condominium Corporation No. 9813678 against Statesman Corporation must fail because there is generally no right to sue a party who is also an insured under a policy of insurance.  Statesman Corporation was an owner of units in the condominium and an insured under the condominium corporation's insurance policy.  Justice Cote commented generally about the underlying purpose of condominium insurance at paragraph 35:

 “Those concerned in a condominium development do not want to have to worry about such unpredictable and complex topics. They want to exclude fault, risk, causation fights, tedious technical investigations, and expense. Statute and bylaws direct the condominium corporation to take out one policy for all, to avoid delay, expense and uncertainty. They replace lengthy litigation with an immediate no-fault purse for all.”

Justice Cote went on at paragraph 72 to state this limiting principal and clearly state that the bylaws are a contract amongst the owners and the condominium corporation:

 “The bylaws of this corporation provide that all insurance must have a waiver of subrogation against the owners and against the corporation’s manager. And they say that policies must name as insureds all owners from time to time. Those bylaws are a contract among the corporation and all its members.”

The Statesman case did not deal directly with the issue of reimbursement by an owner of a condominium unit of the payment of an insurance deductible by the condominium corporation.  However, the case clearly states the principal that all condominium owners are bound by the bylaws and that this is a contractual obligation.  Hence if the bylaws of a condominium corporation clearly state that an owner of a condominium unit should be obligated to reimburse a condominium corporation for the payment of the insurance deductible then it follows that an owner is contractually obligated to reimburse the condominium corporation.

Notwithstanding the compelling logic of this proposition, Honourable Mr. Justice Donald Lee of the Court of Queen's Bench of Alberta in Shivji v. Owners: Condominium Plan No. 0122336, 2007 ABQB 572 denied the claim of a condominium corporation for $23,467.35 for damages caused by an owner's tenant setting the thermostat to zero which caused the pipes to freeze and burst.  The deductible of the condominium corporation was $25,000.00.   Justice Lee considered the Statesman case, among other cases, in his reasons but does not address directly the issue of whether the insurance deductible should be reimbursed by an owner if the bylaws specifically state that it should.   

It is suggested that, so long as the bylaws of a condominium corporation clearly specify that it is the obligation of an owner to reimburse the insurance deductible paid by the condominium corporation, it remains open for condominium corporations to argue that by virtue of the bylaws, which the owner is contractually bound, the owner is liable to reimburse the insurance deductible.   The insurance deductible is a portion of the loss which is not paid for pursuant to the insurance policy.  The owner is through the condominium corporation the insured under the insurance policy and would normally as a home owner be required to pay the insurance deductible.  The insertion of the condominium corporation between the insurance company and the owner should not change this.  Where a deductible is required to be paid the owner must be liable for this financial connection to the loss which is being claimed pursuant to the condominium's insurance.  Otherwise this implicitly allows an owner to pass on to the balance of the owners all but the owner's proportionate unit entitlement portion of the insurance deductible.  It is suggested that this result should be avoided if the bylaws are clear. 

Some cases allow for recovery and others have not.  Of note other Provinces in Canada have allowed for the recovery of the insurance deductible if the language used in the bylaws is reflective of the owner being "responsible" for the insurance deductible regardless of fault or negligence.  Following from this it behooves condominium corporations to review their bylaws to be sure that their bylaws are clear in respect of an owner's obligation to reimburse the payment of an insurance deductible made by a condominium corporation.